Should we pay off our mortgage or refinance ?
Hi Terry! I’ll try to make this as simple as I can. Right now, we are in a ARM mortgage at 3.75%. Our payment is $1130 a month. We have a balance of $202,000. We were looking at refinancing this loan and can get a 20 yr fixed thru our company, New Rez at 2.99% and $1141 a month. We are both in our 70’s. We also realize that if we pay it off, we will pay a hefty tax on taking out the $$ from our IRA. Also, my hubby takes every tax deduction he can and usually we get $$ back in the neighborhood of $4000 each year. An opinion would be so appreciated! Thanks for all you do! Sue
Terry Says
Definitely do NOT withdraw money from your IRA to pay off your mortgage!
Second, check around to compare monthly rates/costs on a 20 year fixed rate NOW.
Check at Quicken.com and GuaranteedRate.com — though they are ALL swamped with refis and may not get it done before rates rise again!
Ask your own mortgage company to “break out any additional costs” for the refi that will be “rolled into the mortgage balance.” That’s their sneaky way of making you pay the cost of the refi (and making up for their loss of the higher rate loan)!!
But top priority– and it’s a column that I just wrote and will get posted in a few days — DO REFI YOUR MORTGAGE INTO A FIXED RATE LOAN –RIGHT NOW!!!
P.S. Why stop at 20 years. Assuming you are going to be paying on this loan for the rest of your lives, why not drop the payment as much as possible. I just looked at the numbers I used. Here is a direct quote from that column:
The current average rate nationally [on a 30 year fixed rate loan] is 3.37%, up almost a quarter of a percent in the past week. At that rate, for every $100,000 you’ll borrow, you will pay $441.82 per month in principal and interest
Bottom line: As long as you are going to be paying this mortgage the rest of your lives, lock in the lowest monthly payments! It’s probably weighing on your mind that you have a payment every month — but at least it will be smaller. And you’ll still have your IRA cash to live on as well as SS.
