Bernard, I would agree except that if you have to pay $4000 in closing costs, that refi loan makes no sense. You're not going to break even for a long time. What happens if you decide you want to move? You've lost money.
(Now let's suspend reality and say that a refi could somehow cost $1000, then it makes sense.)
Plus, this is the fact that no mortgage person wants to acknowledge, when you refi, the clock starts over on paying down principal, so you're back to paying a very small amount of principal each month. If you do as I suggested, you immediately jump down in the amortization table from year 4 to year 10.
Why is that important? Because you are most likely going to want to sell your home at some point. You want to be as far down in the amortization table as you can, so you can make more profit when you sell.
You can probably enlighten us more than I can, but I believe a 20 year mortgage is a much better tool, if your goal is to pay off a mortgage. Look how much more principal is paid at the beginning of a 20 year vs. how much principal is paid at the beginning of a 30.
If a person were to do my plan, the key is to do it again, you have time to do this 2 or three times pretty easily, and you could end up paying off your house between 15 and 20 years, depending upon the value of your home and how long you take to pay off the HEL.
(Now let's suspend reality and say that a refi could somehow cost $1000, then it makes sense.)
Plus, this is the fact that no mortgage person wants to acknowledge, when you refi, the clock starts over on paying down principal, so you're back to paying a very small amount of principal each month. If you do as I suggested, you immediately jump down in the amortization table from year 4 to year 10.
Why is that important? Because you are most likely going to want to sell your home at some point. You want to be as far down in the amortization table as you can, so you can make more profit when you sell.
You can probably enlighten us more than I can, but I believe a 20 year mortgage is a much better tool, if your goal is to pay off a mortgage. Look how much more principal is paid at the beginning of a 20 year vs. how much principal is paid at the beginning of a 30.
If a person were to do my plan, the key is to do it again, you have time to do this 2 or three times pretty easily, and you could end up paying off your house between 15 and 20 years, depending upon the value of your home and how long you take to pay off the HEL.
