Refinancing home when only have 6 1/2 yrs left on mortgage?

[traces7]

We are considering refinancing our mortgage. We only have 6 1/2 yrs left and our home would be paid for. However we would like to get some extra cash out when we refinance to do some work on our home and get our DD some braces. We really can't afford another monthly payment which is why we are considering this. We did it once before in 2003.

Our credit union has a 15 yr mortgage at 3.375%, we would probably want no more than a 10 yr loan though. (Our current rate is 5%). We owe about $37,000 on our home, it's worth about $135,000.

Would you refinance? We hate the idea of adding more years to our mortgage. But we do need to do some updates to our home. Right now the final payment is due June 1, 2018. Our DD graduates in June 2018, so we'd have the mortgage paid off just in time for DD to start college.

A lot of it is that we want to get DD braces, she really needs them, and we can't afford the monthly payment at this point. Our budget is pushed to the limit as it is. Would you refinance when you only have a short time left on your mortgage? Thanks for any advice!

 

[RitaE]

I'm not usually in favor of people extending out mortgages in order to pay other bills but I think braces for your daughter are a pretty good reason and interest rates are extremely low.

I don't know if I'd do it, I probably scour around for some more options first. But I'd definitely consider it for braces for my kid.

 

[lurkernj]

I agree with pp. I was going to say no, don't do it, but if that is the only way your DD can get braces, I'd say that was more important. I'd look around though and maybe try to get a home equity loan instead, the rates are pretty low on those too.

We are 2 years away from our first DS going to college and also have our mortgage timed to be paid off when he starts and I won't trade that for anything (unless there's a medical emergency or something extremely significant). When the time comes, I want college to be the priority and not have to worry about not having the money for him.

 

[kacaju]

We have about 6 1/2 years left on our mortgage as well. I see lower rates all the time and think should we/could we (we have a 5.35 rate) but you know what those 6 years will fly by and I really want to be mortgage free! If you have $35,000 left, your payment are probably way lower then mine (we have about 84,000 left) is there any way you or dh can get a second job to get the braces? To answer your qustion...no I would not try to refinance my mortgage with 6 1/2 years left on it

 

[HillPete]

I would take a good look at how much interest you would be paying on the new loan. An orthodontist you pay each month is unlikely to charge interest. I know you didn't want another payment each month, but how much more will your mortgage payment be?

Our orthodontist wanted a chunk up front (he even let us pay that over 2 months) and then divided the rest over the next 15 months (that is how long the treatment should take). For my older DS it was only $50 a month (not a lot needed) and my younger it's only $110 (he needs lots more!). There's no interest, no penalty for early payment, no huge whoop if we missed a month.

Definitely take a hard look at how much more it will cost for a re-fi than just making a payment plan with an orthodontist. Good luck!

--H

PS - is there a dental school near you? they are often quite reasonable with pricing.

 

[JKMJ441724]

Not a lot of info supplied in your original post. But I would seriously factor in closing costs. By the time you take that into consideration, those braces could cost you $10,000.

I'm near your situation. My house will be paid for in 5 1/2 years. We owe about 60K. I desperately need a new deck and front porch. My A/C went out last week and we have to get a new unit and I will need a new roof SOON. But even with all that, I will not refinance. Our rate is 5%, too. And those new rates look GOOD, but I've talked to several banks and in my area, no one has anything without closing costs unless I'm willing to go with an adjustable rate. My opinion is that it's not worth it to refinance. I'm going to just suffer through it and have my house paid for in time for my daughter to go to college.

Good luck with whatever you decide.

 

[traces7]

Thanks everyone for the input, some good things to think about. We were just playing with the idea of refinancing, not sure we would do it. The braces will cost about $5500. The monthly payments so far range from $170-$210 (doesn't seem like much, but we just can't swing it right now). It is for 2 yrs with no interest. We do have one more consultation, but they're all running about the same right now.

We are checking into other possibilities, maybe borrowing from the inlaws. We could probably come up with $1500 of the cost. And insurance pays $1000 over the course of the 2 years.

I wasn't really thinking of the closing costs, have to check into it, if we did refinance. I think our monthly mortgage payment would be about what we pay now. (All things I'd have to check into first).

I have considered a 2nd job to pay for the braces. The nearest dental school is 50 miles and they have a long waiting list (2 years I think).

Well, hopefully we'll think of something in a month or two, that's when we'd like to get DD's braces. Thanks for the advice!

 

[luvdisney00]

I would look at a home equity line of credit and a financing plan through the orthodontist. My ortho does not charge any interest and our monthly payment is $175 (although DD 13's braces were especially expensive because of what she needed done). Try to make the payment without using the loan, but if you can't just write a check for what you need. This way you don't need to decide on a lump sum and have to pay interest on it, you only take what you absolutely need.

I would not refi on a mortgage with only 6.5 years left, you have already paid most of the interest and by doing a refi will be paying it again. In the long run it will cost a lot more.

 

[JKMJ441724]

Thanks everyone for the input, some good things to think about. We were just playing with the idea of refinancing, not sure we would do it. The braces will cost about $5500. The monthly payments so far range from $170-$210 (doesn't seem like much, but we just can't swing it right now). It is for 2 yrs with no interest. We do have one more consultation, but they're all running about the same right now.

For my A/C unit, i got an interest free credit card for 21 months. We will just pay the absolute minimum (I'm figuring about $50/month) until things change. I usually get a pretty nice christmas bonus and we usually get some $$ back on income taxes. so whatever balance is left (if any) at 21 months, we will worry about then.

I would look at a home equity line of credit and a financing plan through the orthodontist. My ortho does not charge any interest and our monthly payment is $175 (although DD 13's braces were especially expensive because of what she needed done). Try to make the payment without using the loan, but if you can't just write a check for what you need. This way you don't need to decide on a lump sum and have to pay interest on it, you only take what you absolutely need.

I would not refi on a mortgage with only 6.5 years left, you have already paid most of the interest and by doing a refi will be paying it again. In the long run it will cost a lot more.

I also have a HELOC available to me. I'm locked in at 5% on it as well (but only for 3 years). When I opened it, there were NO CLOSING COSTS!! I would definately check on that too. Don't be afraid to ask if they will waive all or part of closing costs. They worse they can say is no. You do have an additional monthly payment, but on $5000 I don't think it would not be as much as $175.

Again, good luck.

 

[TnTWalter]

I would shop around for the braces. Get a 2nd and 3rd opinion from reputable places. You never know.

I would also get a second job if that was the only way to pay for them.

I wouldl also keep the second job to pay for house repairs.

Good luck.

Trish

 

[lisaross]

Wow seems lots of us have about 6 1/2 years left on our mortgage! I started with a 30 year mortgage at 8.7 then went to a 15 year mortgage for 5.5 which i have the 6 1/2 years left!

OP - i would try not to refinance - but if u have to, look for a 10-yr and find out the closing costs etc and u could possibly pay it off sooner!

I am thinking of doing a10yr but paying more and pay it off in the 6 1/2 years i now have - was thinking iwould save some $$ w/a lower rate - but i'm not sure...

 

[mom2princesss]

With the little amount you owe, it is extremely unlikely that you would find a bank that would refi you. Most have minimum loan amounts and I wouldn't add that extra amount when you will be paid off so quickly.

I would look into a home equity line of credit. You should have tons of equity and those typically have lower interest rates then refis.

 

[Natalie's Mommy]

i wouldnt do it, you're sooo close to the end. i'd find something to cut from the budget or get a 0 interest credit card

 

[traces7]

I would shop around for the braces. Get a 2nd and 3rd opinion from reputable places. You never know.

I would also get a second job if that was the only way to pay for them.

I wouldl also keep the second job to pay for house repairs.

Good luck.

Trish

We've been to 2 orthodontists, have an appt. for a third in Sept. They're all running pretty close so far.

 

[traces7]

i wouldnt do it, you're sooo close to the end. i'd find something to cut from the budget or get a 0 interest credit card

Where do you get a 0 interest credit card?

 

[mikehn]

No way. With 6 years left on your mortgage, your monthly payments are almost all principal, very little interest. You're makin a huge mistake if you refi now. Like someone else said, get a home equity loan instead.

 

[JKMJ441724]

I am thinking of doing a10yr but paying more and pay it off in the 6 1/2 years i now have - was thinking iwould save some $$ w/a lower rate - but i'm not sure...

I've tried to find one of those too. So far, everyone I've talked to suggested just staying where I am. Said by the time I added in the closing costs, it would still be basically the same as staying with what I've got already.

Where do you get a 0 interest credit card?

I get offers for those in the mail all the time. You can also search for them online - but if I did that, I would only go with a reputable card company and not some off brand.... I just opened one with Citi. Got 21 months interest free for purchases and balance transfers (although those have a one-time balance transfer fee of 3%)

 

[LJRJR]

I wouldnt refinance at this point. We looked into it and the process of refiancing would run you atleast $5,000. However there are banks that claim to do it for less.

 

[traces7]

Thanks everyone! Guess I pretty much figured out refinancing probably isn't the way to go. Maybe we'll try and save up as big a down payment as we can, so we can hopefully get the monthly payments down to $100 or $125, I think we could manage that (with $1000 down the payments were $210 a month). It's a 2 year payment plan. New windows for the house and other household projects will wait a little longer!

 

[FINFAN]

if you cannot get a 0% cc, go for a HELOC....you may incur costs for the appraisal, but with so little left on your mtg no worries I would think. If you are making home improvements, makes sense and you can write off the interest. Our local bank has the adjustable rate on a 10 year HELOC at 2.5% right now, and you only borrow what you need unlike a refi..however, you still need to makeminimum monthly payments which would be no different than making monthly ortho payments. Our Ortho let me start at $100 a month on DS, and then I upped it when I could, but he was still paid off in 2 years and it was interest free...most by us are interest free (Chicago burbs). The downside of a HELOC is the variable rate...while low at the moment , our current National credit rating will most likely affect that int he next year or 2...in general, paying off any variable rate debt is a good idea now, so that is a bit of a risk depending on how much you borrow.