Need mortgage refinancing advice please...

[Petunia 100]

How old are you, Roland? How long have you been making 110k per year?

I say this not to criticize, but to encourage you to get on a budget: you make too much money to not have cash available for home repairs. You should be setting money aside every month for home repairs so that you can handle this sort of thing without resorting to borrowing against your home.

Regarding the mortgage, I would definitely refinance that 16 years to go 5.75% loan to a new 15 year loan at 3%. Absolutely.

[Petunia 100]

The deck has a stairwell, for that purpose. But the deck & steps are getting rickety after 19 years now and needs to be replaced.

Yes, I understand that. I was saying that boarding up the kitchen door does not sound like a good plan to me.

[Roland123]

How old are you, Roland? How long have you been making 110k per year?

I say this not to criticize, but to encourage you to get on a budget: you make too much money to not have cash available for home repairs. You should be setting money aside every month for home repairs so that you can handle this sort of thing without resorting to borrowing against your home.

Regarding the mortgage, I would definitely refinance that 16 years to go 5.75% loan to a new 15 year loan at 3%. Absolutely.

...Indeed Petunia. I have not done well with budgeting/saving. Guilty as charged as they say! Hence all this much needed advice. :-)

[Petunia 100]

I see your point of view. Is it correct to say that the only situation to add a 2nd mortgage is only when specific home improvements actually increase the appraisal value of the home? (Such as a sunroom, extra square footage added, etc)

Please educate me more... I realize I lose a chunk of equity in this possible situation, and would be paying interest on a deck.. yes. Paying cash is always the best scenario. But what other financial pitfalls am I getting into if moving forward with this re-finacing plan, using the above figures (from my first post)?

You have an existing 2nd mortgage. What is the rate on that?

Have you considered opening a HELOC to pay off the second and finance the home repairs? Typically, a HELOC can be opened for free or very low cost.
Then you can make paying the HELOC down to zero a priority. Make a budget and include aggressive HELOC payments. Personally, I would do that before I would finance the repairs over 15 years.

[Petunia 100]

...Indeed Petunia. I have not done well with budgeting/saving. Guilty as charged as they say! Hence all this much needed advice. :-)

That's how I landed here too.

[Roland123]

You have an existing 2nd mortgage. What is the rate on that?

Have you considered opening a HELOC to pay off the second and finance the home repairs? Typically, a HELOC can be opened for free or very low cost.
Then you can make paying the HELOC down to zero a priority. Make a budget and include aggressive HELOC payments. Personally, I would do that before I would finance the repairs over 15 years.

....well, I did a few years ago already. That's my 2nd mortgage. $25k that has to be re-financed, as the rate has gone up from 2.99 to 5.2% So I'm having to re-finance that plus possibly adding the cost of the deck replacement. (See my original figures in my first post for a better explanation.)

I'm open to all advice, no matter how critical. :-)

[Roland123]

You have an existing 2nd mortgage. What is the rate on that?

Have you considered opening a HELOC to pay off the second and finance the home repairs? Typically, a HELOC can be opened for free or very low cost.
Then you can make paying the HELOC down to zero a priority. Make a budget and include aggressive HELOC payments. Personally, I would do that before I would finance the repairs over 15 years.

...By the way, is refinancing a HELOC even an option? I have $40k available with 25k as my balance. But then I would still have two separate loans still to pay each month. (HELOC and mortgage)

[Petunia 100]

....well, I did a few years ago already. That's my 2nd mortgage. $25k that has to be re-financed, as the rate has gone up from 2.99 to 5.2% So I'm having to re-finance that plus possibly adding the cost of the deck replacement. (See my original figures in my first post for a better explanation.)

I'm open to all advice, no matter how critical. :-)

Oh OK, the 2nd is a HELOC. Then you could just draw on it to pay for repairs, correct?

How about the rest of your financial picture? Are you servicing other debts? If you have a lot of money available each month to pay down the debt, just pay it down as quickly as you can. The interest difference on 25k at 2.99% and 5.2% is $552.50 in a year, but that's assuming you owe the whole 25k for the entire year. If you're paying it down 2k per month, the difference is approximately half that.

[Roland123]

Oh OK, the 2nd is a HELOC. Then you could just draw on it to pay for repairs, correct?

How about the rest of your financial picture? Are you servicing other debts? If you have a lot of money available each month to pay down the debt, just pay it down as quickly as you can. The interest difference on 25k at 2.99% and 5.2% is $552.50 in a year, but that's assuming you owe the whole 25k for the entire year. If you're paying it down 2k per month, the difference is approximately half that.

...Unfortunately I'm only paying about $250-300 each month on the HELOC. Otherwise I'll be short on cash-flow. Vicious cycle, I realize. With a family, lots of expenses. I definitely need more income.. and better budgeting.

[Petunia 100]

...Unfortunately I'm only paying about $250-300 each month on the HELOC. Otherwise I'll be short on cash-flow. Vicious cycle, I realize. With a family, lots of expenses. I definitely need more income.. and better budgeting.

Are you married? Is your spouse on board with budgeting?

I suggest you just start from where you are. List all monthly obligations. List all expenses. What does it cost you to live per month? Start identifying which expenses can be reduced or eliminated to free up money savings and debt reduction.

[snafu]

Roland, the need to replace gutters before other, truly serious problems arise seems to have revealed other issues. This seems like a terrific opportunity to solve problems if you can get DW [Dear Wife] on board.

How much will new, 15 yr mortgage you are contemplating, change current combination of Mortgage and HELOC monthly payout? I continue to hope you'll check CU mortgage offerings as many offer profit rebates to members.

It is in your interest to understand where your money goes.
You need to know the value of your retirement program, what your program holds and fees.
It's helpful to track your mortgage, understanding how your payments distribute between principal, interest, taxes and insurance [if applicable].
How much do you pay for home and auto insurance? Are the amounts & deductible appropriate and premium competitive? Do you get a discount for bundling? Are you charged convenience fees?

So often a few minor changes add up to noticeable savings which are easily re-directed to other priorities.

[Roland123]

[QUOTE=snafu;435028]Roland, the need to replace gutters before other, truly serious problems arise seems to have revealed other issues. This seems like a terrific opportunity to solve problems if you can get DW [Dear Wife] on board.

How much will new, 15 yr mortgage you are contemplating, change current combination of Mortgage and HELOC monthly payout? I continue to hope you'll check CU mortgage offerings as many offer profit rebates to members.

....Good question... I'll be paying the same monthly amount by refinancing at 15 years, even with taking cash out for needed home improvements. See my original post for all the numbers, but it does take my mortgage balance up to $165k from $113k by rolling in my HELOC balance and home improvement costs. That's why I'm asking for advice before I do anything. ...Thoughts?

....Sorry, what is CU?

[Jluke]

....Sorry, what is CU?

CU = Credit Union

[LivingAlmostLarge]

I'd do the repairs but before i do it. What is your budget? Maybe post here and get a second pair of eyes and then you'll feel more secure moving forward with the plan.