mickey_bigdaddy asked:
My goal is to:
My goal is to:
a) Reduce my monthly morgage payment
OR
b) keep the monthly payment around the same but, shorten the term to 15 yrs.
I have a 6.4% 25 yr. “home equity loan” (already did a zero cost equity refinance in 2004) on my home in Texas. I owe about $181,000 with the value of the home around $263,000. I plan to stay in the house another 5-6 years.
I am told that I cannot convert my current “home equity” loan to a “fixed” loan. Right now, the home equity rates are around 8%. Is this all true, that I have to stay with a home equity loan? Do I have any options to achieve either of my goals of a) or b) above?
ANTOINE
MACK
Texas has some funky rules and you need a mortgage professional in your area to answer
BRET
in order to shorten the term and keep the payment the same, you;d have to get a lower rate which isn;t likely right now, same with getting a lower rate – rates won;t be any lower than you’re already paying – if your rate is variable, you better just refi to a 15 yr or longer fixed rate Mtg
DEREK
A few thoughts:
Are you permitted to pay off and close the home equity loan?
If you’re not sure, contact the lender to find out.
I would think that you can refinance into a 30-year fixed rate or an ARM (if you prefer) with an option for interest only payments. That would significantly lower your monthly payment. As long as there is no prepayment penalty, and you can pay down principal whenever you choose (bringing down the minimum monthly payment requirement even further).
If you did refi, and still wanted some extra liquidity, you appear to have enough equity to take some cash out.
As for the 15-year fixed, that seems to contradict your objectives. A 15-year fixed is suitable if staying for the long haul, because a very significant amount could be saved over the life of the loan. However, in the short term you would be opting for a high monthly payment.