My house is valued at 199k, I owe 103k on a mortgage of which I have 18 years remaining. The house I want to buy is 250k. Would it be better for me to reduce the term of my mortgage to 10 years and stay where I am for another 5 years - then remortgage and buy the new place, or buy the place now - this would involve extending the term of my mortgage to 25 years again. Help appreciated.
2007-03-06 09:32:22 · 4 answers · asked by Stone0898 1 in Business & Finance ➔ Renting & Real Estate
Your mortgage amount would be 250-199+103 = $154,000.
If you got a 15 year mortgage at 6% per year, your monthly principal and interest payments would be about $1,300.
But consider your transfer expenses: Real estate agent's fees of about $14,000, transfer taxes on the old and new house of about $4,500. Closing costs on the new house ????? maybe another $4,000. Moving expenses???????
Without seeing the two houses, I wonder if all of the expenses are worth it. In your price range, $51,000 does not look like a big step up.
If I had extra cash or income, I would accelerate the payoff on the current mortgage, to cut down on interest payments.
2007-03-06 09:58:11 · answer #1 · answered by regerugged 7 · 0⤊ 0⤋
First off, you will get a better interest rate on a fifteen year mortgage, and it gives you more payment flexability. If you wish to make the ten year payments, you can still do that, and pay hte home off even earlier.
About the purchse, I do not know the market you are in , or your financial situation, so some of this need not apply. If there is not going to be a huge drop in the value (chances are there will not be) buy the new home now. Waiting five years is much more likely to see an increase in house prices, and you will have given up five years of rental income that could have added to your net worth. If you plan on living in the first home, borrow cash up to 80% of the value and pay down the balance on the second home. If you will live in the second home, keep it at the higher value and pay down the first.
E-mail if you need more specific help.
2007-03-06 17:57:40 · answer #2 · answered by Ron B 3 · 0⤊ 0⤋
The new place may or may not be there 5 years from now. May I ask, why do you keep thinking that one house is better than another? Selling anytime soon will likely be a loss for you because you will not get the value of the investment you've made and certainly not the closing costs, moving costs, etc. that you have incurred.
2007-03-06 17:57:33 · answer #3 · answered by Venita Peyton 6 · 0⤊ 0⤋
If you can afford it then you should reduce the current mortgage. Paying that off makes better financial sense.
2007-03-06 17:37:03 · answer #4 · answered by Ryan 2 · 0⤊ 0⤋