Refinance

[Chad Reynoso]

Hi BP,

I have a refinance question...

Is it worth or a smart move to refinance for 1% reduction in rate while 9 years into current loan. Beginning 2017 my loan will cap out at 5% and stay fixed for the remainder of my 30 yr term. Advice on starting over with the interest being the majority of payment for tax write off or continue to keep existing loan at 4% until 2017 and make the current payment which has more principal reduction??

[Russell Brazil]

How much will your payment be reduced by? Also just because you reduce the amount due on your mortgage, does not mean you have to lower how much you actually pay. So you could still pay it off in 21 years, or fast if you so choose.  However having that lower payment could save you financially down the road. You never know when you might experience a job loss, or maybe even am injury that may prevent you from working.  If that is the case, the ability to shift to that lower payment could be very helpful.