My fiance is going to give me a 50% of my mortgage of 160,000 with an APR of 4% fixed 30 years. Would it be better to use some of the money towards refinancing or just use it all to pay the principle?
Posted Dec 4, 2018, 7:53 AM UTC
I found dumping cash into my mortgage pretty much a wash when comparing refinancing. I’d say try that. But you could also try recasting a portion of it if cash flow is more important to you.
What do you mean by it being a wash exactly?
Oh just that after all the extra stuff (inspection, closing costs, fees, etc.) it hardly made sense. That, higher interest rates, and monthly payment amounts ended up being less favorable than just tossing an extra chunk at it each month. Also, seriously look at recasting if the only need is lower monthly payments and you have some cash saved up (mine would have been just a $250 fee and some paperwork). Hope this helps!
Banker here🙋🏽♂️
Few questions before I give any advice.
How long have you had the mortgage?
How much do you owe?
Did you put a 20% down payment when you got the mortgage?
Is this the forever home, or will you ever be looking to move?
I May have some follow up questions.
I've had the mortgage a little over 5 years.
It was a $190,000 VA loan with $0 down payment.
It is a forever home and listed as my primary residence even though I currently don't live in it since I had to move out (military).
I have been renting it out for almost 2 years now.
Why do you want to refinance it?
I'm under the impression that I could get a lower interest rate and it would help make my future payments go a lot further if I keep paying the same payment I make now.
Highly unlikely you'll be able to get a better interest rate right now.
There's almost zero percent chance you get a lower rate on a 30 year mortgage. Rates have gone up considerably since you took out your mortgage. If you refinanced to a 10/15 year mortgage, you might get close to the 4%.
Oh really? I've been out of the states for a while but I've improved my credit a lot since I got the loan.
Rates have gone up significantly in the past year and half. Prime is sitting at 5.25%.