Ask Bill your personal finance question

Interested in Mortgage Refi, but Not Staying Long Term

Is refinancing smart if I'm not planning on staying long term?

I bought my house 2.5 years ago with 80-10-10 to avoid PMI. Balances are $155,000 (30yr,6.943%) and $17,000 (15yr,8%). Current value is $193k, we'll stay 3-5 years. Have excellent credit and 10 months of emergency funds. Want to have cash available and have upcoming home repairs. Should I use savings to pay 6k in closing costs (including points)? Should I combine mortgages or just refinance the first? If I just refi the first, I'd pay cash to make sure no PMI. Is refinancing smart if I'm not planning on staying long term?

Read full question
Bill's Answer
3.8
/5.0
(5 Votes)

Bills.com | Find Learn Save

There are a multitude of factors to consider when planning how best to handle such a large investment as your house. Many people find it prudent to hire an experienced financial advisor to assist with the matter, as the homeownership often is a bedrock to one's long-term financial stability.

That said, you mention that you aren't planning on staying in this house very long, so be sure to do the math and see how long it would take before the interest rate savings on the refinancing offset your closing costs and begin to produce actual savings. 3-5 years may be too short time to make refinancing a worthwhile endeavor.

Also, be sure to take a hard look at your plan for departure from this property. What happens in the event that, 3 years from now, you decided to stay long-term, or find that the local housing market forces you to stay longer than originally planned? Are the terms of the refi still manageable and beneficial?

You may want to consult with a realtor in your area and ask about the prospects of selling your house in the not-so-distant future. Depending on your locale, finding a buyer may or may not be much of concern, but you would be well advised to check into the realties of the local real-estate market. While no one can predict precisely where the market will be three years from now, an experienced realtor should be able to give you information on the area's trends and conditions that may help to give you some indication as to what to expect in 36 months.

If after doing the necessary research and planning, it turns out that refinancing your mortgage is the best option for you, you can apply for a free loan quote at Mortgage Refinance Quote.

I hope that the information I have provided helps you Find. Learn. Save.

Best,

Bill

www.bills.com/

Get Mortgage Rates!
3.8
/5.0
(5 Votes)

People also like to Read

Daniel Cohen

Learn home equity basics, how to use home equity, and the different types of home equity loans. ... Read more >>

Betsalel Cohen

Obama Passes HARP, but borrowers are looking for HARP 3.0 Mortgage Refinance programs. When a HARP 3 update is announced, you... Read more >>

Daniel Cohen

HARP Mortgage Program Refinance | Home Affordable Refinance Program (HARP) was just updated to avail low interest rates to mo... Read more >>

Daniel Cohen

US Bank | Learn about US Bank and no-closing-cost refinance mortgage loans. US Bank offers no closing cost mortgage loans, bu... Read more >>

Betsalel Cohen

Low mortgage rates can help you save money. Also, refinance now if you want to lower your payments, take out cash, get rid of... Read more >>

Betsalel Cohen

Did you take an FHA loan a number of years ago? You might be able to lower your payment and/or save big money by refinancing ... Read more >>

1 Comments

1500 characters remaining
  • 35x35
    Jul, 2009
    Jay
    In a situation like this, you need to determine exactly how long you plan on keeping your house. How much equity you have built up, closing costs, etc. are all factors you need to think about and see WHEN the best time to refinance would be to get the most out of your investment. Hope this helps.
    0 Votes

loading...