Would you refinance?

[Deleted]

Things are really tight in our home right now.  I'm not comfortable posting the budget, but lets just say it's down to bare bones, with no car payments, $50 total for cell, no cable, etc and still only $100 left in the bank each month after groceries.  This doesn't include gifts, fun money, hair cuts, clothes, or anything.  It's simply bills, food, and gas.  We're 4.5 years into a 15 year mortgage.  We can refinance and drop our monthly payments about $300/month, but the total interest added would be about $20k.  I'm guessing we'll only stay here for about another 3 years-ish, so the amount of principle paid will be a little under $10k less than if we don't refi.  

If we don't refi, there are a few smaller bills like our cc and care credit that will be knocked out within a few months if we keep things under control.  This will free up a couple of hundred dollars a month.  The thing is, due to DH changing jobs and the effed up way his last employer worked, we have to pay an extra $400/month for the next two months for insurance. (They were two months behind in paying so we have to pay the old and new all at once)  And what if there is a car problem or any medical expenses at all?  What about my son's second birthday or Christmas?

If we refinance, we'll have that month or two delay with no mortgage at all, which would allow us to pay that extra insurance without depending on the cc as well as pay off our cc and care credit for the most part.  Then we'd essentially be starting fresh.  

Part of me thinks we should suck it up and try really hard and keep at our current mortgage.  The rest of me thinks it's totally not possible.

[Deleted]

Do you have the money to refi?
I don't think it's a bad idea, I prefer a 30 year mortgage bc you can just pay it on a 15 year schedule but have the flexibility to not pay it if needed.

[Deleted]

We'd still stick to the 15 years. They are quoting under $2k to refi and we'd have to roll it into the mortgage.

[badgergrl]

What is your current interest rate? What is the refi rate?

I would seriously consider seeing if you can find a low cost or no cost refi and changing to a 30 year mortgage. You can still pay (if you can or want) like its a 15, but if some emergency happens you wouldn't lost your house because you can make the payment. It makes no sense to me to be so tight on your budget you won't even post it but insist on keeping a 15 year mortgage.

[Deleted]

Sept 30, 2014 22:16:57 GMT -5 badgergrl said:

What is your current interest rate? What is the refi rate?

I would seriously consider seeing if you can find a low cost or no cost refi and changing to a 30 year mortgage. You can still pay (if you can or want) like its a 15, but if some emergency happens you wouldn't lost your house because you can make the payment. It makes no sense to me to be so tight on your budget you won't even post it but insist on keeping a 15 year mortgage.

I agree with this. If you are going to refi, refi to a 30.You have no fun money, cc debt, and cant buy presents for your sons bday. You need breathing room. Do you have an efund? 

[maddiepaddy]

It sounds like things will only be tight for a couple of months, is that right? It will likely take at least a month for your refi to go through - leaving just another month or so until your finances loosen up.

Honestly, if I were you I would look for a more temporary solution. Especially since you hope to sell in a few years, the $10k less in equity seems like a high cost to pay to get out of a short term situation. Can you seek a short term personal loan or HELOC from your bank? Leverage funds available on a CC for a few months and the prioritize payoff?

[Deleted]

Sept 30, 2014 22:25:35 GMT -5 maddiepaddy said:

It sounds like things will only be tight for a couple of months, is that right? It will likely take at least a month for your refi to go through - leaving just another month or so until your finances loosen up.

Honestly, if I were you I would look for a more temporary solution. Especially since you hope to sell in a few years, the $10k less in equity seems like a high cost to pay to get out of a short term situation. Can you seek a short term personal loan or HELOC from your bank? Leverage funds available on a CC for a few months and the prioritize payoff?

I am reading it as it is not temporary and they have only 100 leftover each month before paying the insurance. She said they would have to use credit cards the 2 months they make the insurance pmts.

[Deleted]

Current interest rate is like 4.75 and new would be about 3.75 or something like that. (I just woke up) We have no efund. We have about $1000 left in those smaller balances and one they are gone that frees up about $300 a month. The new insurance would add a total of $800 to the cc debt because we'd have to put food and gas on the cc.

[UnderProtest]

Truthfully if its just a couple months because of insurance and debt that will soon be paid off, I would not suggest refinancing. You will be financing over 2k for 15 years. What would the interest on that money be? Can one of you take a part time job for the mean time? Something like babysitting or freelancing? Can you sell stuff on craigslist to get you through? Would you be eligible for a food bank to get you by?

I guess I would also suggest posting a budget. These ladies are great at finding ways to cut back. Hugs.

[kadams767]

What are the minimums on the cc and care credit? $300/mo sounds high for that amount of debt, but maybe I'm misreading. I know you don't want to, but if it's possible to slow down the debt repayment for a few months while you get the insurance settled, that seems like it might help. Because, at least IMO, a refi takes time and isn't going to offer instant relief within a month like it sounds you need.

Otherwise, though, I guess without having the full picture, I have to agree with others who said to refi to a 30 year mortgage. It sounds like things are really tight with the 15 year.

[mpc]

I think you should refinance. I paused when you mentioned the 10k difference in principle paid in 3 years, but really that is at the expense of being able to afford to live now. If you came in here and posted your post-refinance budget, which included that extra 300/month, no one would tell you to cut out all fun money/hair cuts/gift/etc just so you could put another $300 on your mortgage each month. Personally, I would seriously consider going with a 30 year mortgage, but I won't fault you for sticking with a 15.

[my3bears]

If you're only staying for 3 more years (7-8 years total), why do the 15yr mortgage, then or now? To me, mortgages less than 30 years are for when you are sure you will be staying through and past the mortgage term. If it's to save money, then you're kind of "cutting off your nose to spite your face." You aren't saving money on a 15yr mortgage if it means you have to take on CC debt, have no efund, and not save for retirement (my assumption), you know? So I'm on team 30yr mortgage. Is your mortgage payment above 25% of your pay?

[LoveTrains]

With no efund, refi to a 30 year and roll the mortgage costs into the loan. You are one emergency away from losing your home.

[lys]

Oct 1, 2014 7:43:19 GMT -5 LoveTrains said:

With no efund, refi to a 30 year and roll the mortgage costs into the loan. You are one emergency away from losing your home.

Ditto- you are house poor, have cc debt and no emergency fund. You need more cash coming or more available cash after expenses - which the 30 year refi allaows. Re-fi to a 30 year mortgage, roll finance costs into refi.  Then pay extra principal payments whenever your budget allows.

DS - go low key with his birthday and Christmas - the gifts do not have to be expensive or numerous.