paying off loan question

[imgoingtodisney]

We are thinking of remortgaging our house to get a lower rate. We have 10mos left on the DVC loan. Is it worth it to get money added to our house (home equity/cash cash) loan to pay off the DVC loan? It would be nice to have it gone but then in essence arent we actually paying it off for longer?

 

[Happy Birthday Cat]

Yes you would be. The mortgage on your home will likely be from 15 to 30 years in length. To include 10 months worth of DVC payments would be like paying that amount off over the entire life of your mortgage. It would be nice to have it gone but it soon will be.

HBC

 

[vbfamily]

I don't think it's worth it to get money added to your home loan to pay off DVC. The only way it would probably be worth it is if you were refinancing and walking away from that with cash and then using that cash to pay off DVC.

You may still find it wise to refinance your house if everything looks right-but I'm not an expert so don't take my word for it.

Good luck.

 

[jel0511]

No, I wouldn't do a cash-out refi to pay something off that will be paid off in 10 months anyway. If you had a 10 year loan and most of the term left, the interest savings alone might justify paying it off with a cash-out refi. If you think about it, you mostly have principal left, not much interest is remaining for 10 months, so you basically will be paying TONS of interest on the refi!!! For a 10K balance you'd pay an additional $11.5k over the 30 years (assumptions used is a 6% 30 year fixed mortgage).

 

[Disney Doll]

I wouldn't add it into my mortgage refinance. You are, as you stated, then paying it for the next 15 or 30 years (or whatever the life of your new mortgage will be). If you only have 10 months left, just keep paying it. Maybe if you have a little extra money some months, throw that toward it too.

 

[FLIKFAN]

Absolutely pay it off. If the interest rate is lower on the refinance than dvc is charging then that is money in the bank. You can prepay the mortgage. Discipline yourself to pay the same amount towards your morgage as you were paying to DVC. I'm not sure if you are allowed to write the dvc loan interest off or not, but you are definitely allowed to write off the morgage interest. Good luck!

 

[tiberius]

I would just finish paying it off on your own and then use your DVC payment amount to pay extra on the mortgage to get that paid down sooner.

 

[RAD]

I agree with a previous post, don't pay it off if only 10 months left, unless you have no use whatso ever for the extra $'s from your refi on the house. As it was mentioned all you'll be paying is principle on the DVC loan but paying almost nothing but interest on the refi. My suggestion would be to reduce the refi to not include the DVC payoff.

 

[JimC]

You are probably better off by reducing the term of your new mortgage. Take the lesser of 15 years or the remaining years on your existing mortgage. When you refinance and take out a new 30 year mortgage you substantially increase the financing cost of purchasing your home (another thirty years of interest plus the interest you paid so far).

Consider how old you will be when you finish paying the new mortgage. Many folks will be paying mortgages well into their retirement years because they have reset the clock to 30 years on new mortgages.

With 10 months left on your DVC mortgage, you are paying very little interest. For example if you had a $15,000 DVC mortgage at 11.5% and a ten year term -- interest expense on the last 10 payments are only about $107.