Quote From: davisdaI am so very freightened because I got an interest only mortgage loan and the interest only will run out in January. I did this because I needed more cash flow to live within my means. At today's market, my loan payment would more than double.
I am trying at this very moment to decide if I should refinance now? And if so, into what type of a loan?
30-year mortgage, 15-year mortgage, or 10-year interest only? 15-year mortgage will give me no spending money. If I do the 30-year and pay bi-weekly, I think that takes off 9-years of your loan. Wonder how much extra it would take off if I added another $100 bi-weekly toward principle?
I am 10-years away from retirement so my first thought was 15-year mortgage but then I would find it difficult making my car payments.
Any suggestions out there?
My suggestion would be to refinance into a 30 year fix, if you can afford the payment and if you plan on staying in the house. This way you will build equity, and if you have the extra money send it in and add it to the principle. If you do it this way, you are not locked into a payment (say for the 15 year mortgage or the bi-weekly) that you cannot afford nor are you only paying interest which gives you no equity. An interest only loan can work, if you are not going to stay in the house long and can expect value to rise (tough call at this time in the economy) or if you are guaranteed a bonus and will put it all towards the principle when you get it. Perhaps also not likely given the economy today. The 30 year gives you some breathing room, and you can add to the principle when it is ok for you to do so. When the housing market begins to recover (say in about 5 years or so) you can refinance again possibly into a 15 if you want. Remember as the economy recovers, you should be able to add to the principle payment and still pay it off in less than 30 years, but at a pace that will work for you.
This is just my suggestion - I am no expert, but have recently gone through a home remodel and so have recently researched various options. Hope this helps!
