I’m 66 and have $47,000 left in my 30-year mortgage. I’ll be 90 when it’s paid off. Should I refinance to a 15-year fixed?

I’m 66 and have $47,000 left in my 30-year mortgage. I’ll be 90 when it’s paid off. Should I refinance to a 15-year fixed?

Dear MarketWatch,

I’m 66 and have a mortgage with $47,000 left on it. My rate of interest is 3%, and it’s a 30-year fixed-rate mortgage. I pay $136 a month.

My mortgage was due to be paid off in 2027. But my previous lender determined to promote my mortgage to one other, and now it seems to be like my mortgage will solely be paid off when I’m 90 years previous.

I need to refinance my mortgage to a 10-year or a 15-year fixed-rate mortgage, to pay the mortgage off sooner.

So my query is, is it a good thought to refinance? Please advise.


No Luck

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Dear No Luck,

Looking at present mortgage charges, I’d say you’re higher off not refinancing your 30-year mounted mortgage.

I know you need to pay it off quick. But you’ve bought a mortgage with a 3% rate of interest. You’ve snagged a traditionally low rate of interest, which we could not see once more for years.

If you need to refinance, your month-to-month funds might go up. The mortgage price for the common 15-year mortgage is over 5%. I’m not sure if you’d like that, as chances are you’ll now be retired, or planning to retire very quickly.

If you’re pondering of doing a cash-out refinance, David Krebs, who’s a Florida-based mortgage dealer, stated that it might be a good thought, so long as you have sufficient fairness in your private home and the property worth is excessive sufficient. 

If you’ve bought a “urgent want for money,” Krebs stated, “then it would be price paying the upper rate of interest in trade for having the ability to faucet into the fairness.” Pressing wants might refer to medical payments, or pressing bills. This would be an emergency, and I warning you in opposition to doing it if in any respect potential.

Krebs additionally recommended contemplating a reverse mortgage to repay your mortgage utilizing the fairness in your private home, and then borrow a a part of the remaining fairness — both as a month-to-month cost, lump sum or line of credit score. But do your individual analysis earlier than selecting this feature.

You additionally stated that your mortgage transferred arms between lenders, and — primarily based on you saying you’ll be 90 when it’s paid off — the length bought prolonged by 20 years. I’m undecided why that occurred. Krebs agreed that this doesn’t make sense. 

On chance: You could have entered into a mortgage modification with both the previous or new lender.  A mortgage modification is a mutual settlement, the place each the borrower and the lender signal a written settlement modifying the phrases of the mortgage. In your case, the maturity of the mortgage was doubtless prolonged by 20 years, Krebs defined. 

But “it’s not regular or authorized for the lender to unilaterally prolong the time period by 20 years,” he added. So double-check to see in the event you had signed a doc that prolonged the length of the mortgage.

And again to the refinancing query with a closing warning. The mortgage price on a 15-year fixed-rate mortgage simply inched up to 5.54%. If you refinance, the value of being debt-free sooner could eat your month-to-month price range.

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