Ask Terry Questions Mortgage Refi/ Disposable Income/ What to do??

Mortgage Refi/ Disposable Income/ What to do??

By Terry Savage on June 02, 2015 | Credit/Debt

Hello Terry,

My wife and I would like to refinance our mortgage loan to lower our payment. We are in our 40s and can save $300 per month if we refinance to 30 years. Our intention is to use the savings of $300 and continue to apply it to our Mortgage principle each month. We also have an Equity Loan which will be paid off in 7 years. We could pay down our $6,000 in outstanding debt which consists of braces payments (no interest), a student loan and 1 credit card (no interest). Each is just about equal in the amount we owe. This would give us another $300 per month. We also have an Equity Loan which will be paid off in 7 years so our intention would be to apply that additional income savings as an extra principle payment to our Equity Loan to pay it off early (preferably before our daughter goes to college in 4 years). We have no car payment currently, but anticipate needing a car within the next year or two. We are very budget conscious and disciplined with our money/ disposable income each month once all the bills are paid. We manage to put aside a decent amount each month into savings for emergencies and/ or home improvements. I currently invest 6% into my 401k as well. I am a bit nervous about locking up more $$$$ into investments/401k, as life happens and I want to be prepared and have liquid funds. But, we just feel we could be a bit smarter with all of our disposable income if we make some additional/ new moves. Thoughts?

Thank you, Ken

Terry Says:  OK, well first of all — hurry up and refinance!  I mean this week!  Then try to pay down ALL of those loans — especially the student loan (high rate) and the home equity loan, which no doubt has a floating rate that will rise as the Fed hikes interest rates!  It would be great if you could pay off ALL that debt, and have only your low,fixed-rate mortgage by the time your child goes to college!  In fact, that’s a terrific goal –and  well worth postponing the new car to reach that goal!  When you get all that done, please, please write back to me and tell me about it!  I will celebrate with you — and then you can deal with college and student loans!



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