Post Divorce home refi
Hello – Due to my recent divorce, I am forced to refinance my home loan. My current rate is 2.625%, the outstanding loan amount is $150K with 11.5 years remaining and the home value is $380K.
I’ve considered paying off the loan with retirement funds, but that would deplete my savings by 20%; I am 64, semi-retired and plan to work part time until FRA of 67, which is when I’ll begin collecting SS
I will likely sell my home within the next 3 years, but don’t want to base my refi decision on that because anything can happen, so – my question is – am I better of refinancing @ 15 years for the lower rate, or at 20 (or 30?) years and paying extra each month toward principal:
15 yr 20 yr 30 yr
Interest Rate 6.125% 6.50% 6.625%
Monthly P & I $1267 $1111 $954
Thank you!
Terry Says
Let me ask a question: WHY are you being forced to refinance that lovely low-rate mortgage? MUST you now put the home in your name, if it was in joint name before? Is there any other way your attorney could negotiate leaving your ex’s name on the title, but giving you sole ownership through a quit-claim deed? Then you could keep paying that low rate until you sell, but absolve your ex of any responsibility for taxes, insurance, etc. It could be a separate agreement — agreeing that you get the entire principal when you sell.
It’s a shame to invade your retirement funds. And you definitely don’t want to take SS early to make higher payments on your home.
I guess, if forced, I’d take the lower rate 15-year mortgage.
