Q: I am retired and re-financed from 15 to 30 year fixed in order to lower my monthly payments. The interest rate was at 5.25 %. Is it worth to pay off the entire amount owed, which is $160,000, from my savings, or should I continue paying the lower monthly rate for the rest of my life? Or, a third option I am considering would be to refinance again at 4 %. My income is approximately $5,000/month, and comes from Social Security and pension. Financial advisors usually say to keep the mortgage and invest the money. What do you think? I tried to downsize and sell the house, but had it on the market for a year with no luck.
A: In your situation, your financial advisor is the best person to ask regarding paying off the mortgage loan from your savings. If you do intend to keep the loan outstanding for the long term, the savings to refinance to current rates of about 4.000% will save you $1,440 over 12 months, $7,200 over 5 years, $14,400 over 10 years, and $43,200 over the life of the loan.
If you are still interested in downsizing and would like to sell your home, we would be happy to pair you with the appropriate real estate professional who specializes in your area. He or she can help you analyze your previous strategy and formulate a better plan to ensure that you are successful your second time around.