I am 66 and have a mortgage with $47,000 left on it. My interest rate is 3% and it is a 30 year fixed-rate mortgage. My mortgage was due to be paid off in 2027. My old lender decided to sell my loan to another, and now it looks like my mortgage won't be paid off when I'm 90 years old.
I want to refinance my loan to a 10 year or 15 year fixed-rate mortgage, so I can pay the loan off sooner.
I would say that you are better off not refinancing your 30 year fixed mortgage.
You have a mortgage with a 3% interest rate. We may not see it again for years if you snagged a historically low interest rate.
The mortgage rate for the average 15 year mortgage is over 5%. I am not sure if you want that, as you may be retiring soon or planning to retire very soon.
If you have enough equity in your home and the property value is high enough, David Krebs, a Florida-based mortgage broker, said it may be a good idea for a cash-out refinance.
If you have a pressing need for cash, it might be worth it to pay higher interest rates in exchange for being able to tap into the equity, Krebs said. Pressing needs could refer to medical bills or urgent expenses. This would be an emergency, and I caution you against doing it if at all possible.
Krebs suggested that you consider a reverse mortgage to pay off your mortgage using the equity in your home, and then borrow a portion of the remaining equity, either as a monthly payment, lump sum or line of credit. You said that your mortgage transferred hands between lenders, and based on you saying you ll be 90 when it is paid off, the duration was extended by 20 years. I am not sure why that happened. Krebs agreed that this doesn't make sense.
You may have entered into a loan modification with the old or new lender. A loan modification is a mutual agreement where both the borrower and the lender sign a written agreement that changes the terms of the loan. In your case, the maturity of the loan is likely to be extended by 20 years, according to Krebs.
He added that it is not normal or legal for the lender to extend the term by 20 years. Double-check to see if you had signed a document that extended the duration of the loan.
There was a final warning on the refinancing question. The mortgage rate on a 15 year fixed-rate mortgage went up to 5.54%. If you refinance, the price of being debt-free may eat your monthly budget.
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