Posted on: 26th Sep, 2012 11:50 am
i bought a house 5 years ago and have two mortgages. interest rate on the 1st one is 6.25% and on the 2nd one is 8.22%.
now i have a chance to refinance my first morgage only. i can't decide on the term though. i wonder if i should do 15 years for 3.125% or 30 years for 4%.
if i do 15 years for 3.125% i will pay it off early and will be left with the 2nd mortgage only.
if i do 30 years for 4% i will have a chance to make double payments on the 2nd mortgage to pay it off in about 7 years and have 1st mortgage payments only.
here is the thing though - i was hoping withing the next 5 years or so to try to refinance my 2nd mortgage. i think this will be possible if i refinance my 1st mortgage for 15 years now - i will have more equity if i do 15 compared to 30 years.
i did a lot of calculations and amortizations schedules and i am getting really confused. please advice what will be more benefitial so i end up having reasonable rates and payments, and i pay less interest in the long run.
now i have a chance to refinance my first morgage only. i can't decide on the term though. i wonder if i should do 15 years for 3.125% or 30 years for 4%.
if i do 15 years for 3.125% i will pay it off early and will be left with the 2nd mortgage only.
if i do 30 years for 4% i will have a chance to make double payments on the 2nd mortgage to pay it off in about 7 years and have 1st mortgage payments only.
here is the thing though - i was hoping withing the next 5 years or so to try to refinance my 2nd mortgage. i think this will be possible if i refinance my 1st mortgage for 15 years now - i will have more equity if i do 15 compared to 30 years.
i did a lot of calculations and amortizations schedules and i am getting really confused. please advice what will be more benefitial so i end up having reasonable rates and payments, and i pay less interest in the long run.
If you take the shorter term, you will always pay less over the life of the loan. Here is what I always say regarding a 15 year payment...If you really have enough disposable income, and you do not expect your income to decline, and you are comfortable with the 15 year payment, then take it. If you may not be sure on furture income, maybe take the 30 year, and make the 15 year payment on it. This way you can pay off in 15 years...Yes you will have a slightly higher interest rate, but think of it like this, what would happen if one of the income earners lost their job, or income was reduced. The 15 year loan maybe too much to afford. If you took the 30 year and paid like it was 15 years and you run into income issue later on, you can always make the smaller, 30 year payment. I would suggest looking at the 30 year, and make bi weekley payments, add a payment or two during the year or 15 year payment or a combination of them. This way your home is paid off quicker, but you are not stuck on the 15 year payment. Then work on your 2nd mortgage when equity is better. Good luck
hi lina!
welcome to forums!
i personally feel that a 15 year mortgage will be a good option as it will help you in getting rid of the first loan. moreover, you will also be able to build equity in your property which will help you when you decide on refinancing your second mortgage.
feel free to ask if you've further queries.
sussane
welcome to forums!
i personally feel that a 15 year mortgage will be a good option as it will help you in getting rid of the first loan. moreover, you will also be able to build equity in your property which will help you when you decide on refinancing your second mortgage.
feel free to ask if you've further queries.
sussane
Refinancing the 2nd in coming 5 years with 15 years refinancing on the 1st is the best way as by this your payments will also lower down and then if you want to take any other decision regarding home you would not have to think about this matter
Austin Home Equity Loans - Mortgage Refinancing
Austin Home Equity Loans - Mortgage Refinancing