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Discussion Starter · #1 ·
Hi Frugel Villagers!!

We have a mortgage on our home. We want to retire in this home.

We owe $296700.00.
Never took money out and we are paying extra principal each month.

Our original loan was $399000.

We now have 4 years left on an interest only Libor loan at 4.5 percent interest.

We pay $1114.00 a month for the loan plus extra to principal.

I like cheap debt, and I love this loan...
So, do we pay as much as we can for 4 more years or get scared into refinancing now, before rates may go to 12%???
If we refi to a 30 year fixed, we will pay $1689 or more a month, most of the $ going to interest. If we keep our loan and pay 1K a month extra we can reduce it in 3 years by $36000.00.
Any advice is greatly appreciated.
 

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Our bank doesn't see rates jumping that high. We were just talking. In the last year, here rates have only gone up 0.5% on our mortgage. They aren't predicting any major hikes. You have 4.5 years at lower interest where you are paying off principal. if you refinance, you'd be paying a higher rate, so you principal wouldn't go down as much. What will the new rate be? Because it would have to be a really good rate, or it will take you 10+ years to payoff what you could potentially pay off in the next 4.5 years. It could be a huge step backwards.

Even if the rate is higher, your principal will be lower!
 

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Discussion Starter · #3 ·
Our new loan rate would be above 6 percent for a fixed 30 year loan.
We have 4.5% now, which really helps us to make extra payments to the principal.

Anyways, we will try to pay as much extra for the next 4 years.

My former realtor said to hold off too!:sly:
 
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