Would it be to my advantage for me to refinance my home? I have never done this before. I have been in my home for approximately eleven years.
I am sixty six years old. Thank you.
Answers | 2
That said, here are some things to help you think about it:
a. if you bought the house 11 years ago, sometime in 2004 or 2005, and you got a 30 year mortgage, your interest rate is probably somewhere between 5.75 and 6.25%.
b. you've been paying off your mortgage (but not prepaying -- only paying as much as required) for 11 years, so you've probably paid down about 19% of your original loan.
If you refinanced today, into a new 20 year loan, you'd be extending your loan by only 1 year (since I assumed you got a 30 year loan 11 years ago). The current rate on a 20 year fixed is probably going to be about 4% or so. It looks to me like refinancing that way -- assuming your credit is good and you get the best rates -- will reduce your monthly mortgage payments by about 16%, and only extend the life of the loan by one year. That's a pretty big win. (I ran the numbers assuming a $100,000 loan and your payments go down from about $600/mo to about $492/mo.)
If you don't mind the current level of the payment, you could actually refinance into a *shorter* term loan -- a 15 year -- get a better rate (probably closer to 3.25% or 3.5%) -- have the same (or actually, per my numbers, still a slightly lower) payment -- and have the mortgage paid off several years sooner (in 15 years rather than 19 years -- eventually saving you 4 years of payments -- a very substantial sum).
With 19 years left on a loan, and current rates around 2% lower than your rate is likely to be, chances are that refinancing is a *great* idea -- again, if your credit is good, you are still employed, etc.
I encourage you to sit down with a fee-only hourly financial planner -- after getting some rate quotes from a mortgage guy -- and walk though the scenarios, taking into consideration your full picture -- your income, your spending, your expenses, your expected date of retirement, retirement income (SS, etc). There's no substitute for reviewing the entire situation.
But at a glance, it looks very likely that refinancing is a great idea, if my assumptions about your current rate are accurate.