Hi all! This question is not directly host-related, but there are a lot of homeowners on here and you all give great advice.
My husband and I are considering refinancing our mortgage from a 30-year to 15-year loan to take advantage of low interest rates and further our goal of paying our house off as soon as possible so we can own it outright, and perhaps invest in a rental property or vacation home down the road.
We bought our house in 2010, during the recession, and between our renovations and the market recovery, we suspect our house has nearly doubled in value. However, we have no plans to sell. Our home has everything we need. It is in a great location near the city center but away from the noise of the nightlife, and the house itself is big, so we have room for our AirBnB and growing family. With our first baby on the way, we are excited we live within the boundaries of some of the best public schools in the region. If work requires us to move in the future, we plan to rent the house out because we could currently charge $500-1000 more in rents than what we currently pay for our mortgage, and rents are only going to go up while our mortgage rate remains fixed.
We met with a mortgage specialist at our credit union, and told her our goal with refinancing: to pay our house off as soon as possible so we can own it out right. We wanted to know if refinancing to a shorter loan term would help us meet this goal. We asked: when we would pay our house off on the current mortgage if we skipped refinancing and continued to over-pay on our 30 year loan? How much would we save on interest during the life of the loan if we refinanced, compared to how much interest we would pay on our 30 year loan? The mortgage specialist acted like these were questions she had not been asked before and had trouble answering them.
We were able to answer these questions ourselves through further research, and indeed we could pay our house off a bit early, and spend less overall (even including the refi fees). But the mortgage specialist’s reaction to our questions left us doubtful. The question I have for you all: is it unusual that our goal is the pay our house off early? Is it unusual that we’d rather pay more now to spend less during the lifetime of the loan? Is there something we are missing? It seems logical to us to spend more now to save more later, but we were wondering if we were missing something. Are most homeowners interested in having a smaller monthly payment than eventually paying their house off? Is this why the mortgage specialist may have been so unprepared for our questions?
Most of my friends (millennials) are renters and have decided (despite my encouragement to save) that they’ll never be able to afford a home, so I haven’t been able to ask my peers for advice. I am inspired by my parents, who despite having blue-collar jobs paid their house off when they were in their 30s, and have had great financial freedom since then, but I don’t want to ask them for advice because my dad can be a bit meddlesome and get mad if you ask for his advice and decide not to follow it. My in-laws, though they are highly educated, have generated a lot of consumer debt that they folded into their mortgage during several refinances, and they now owe more on their house than what they paid for the house 20-something years ago. Their goal is to have a small monthly payment and they don’t care about paying the house off. Is my in-laws’ financial philosophy more representative of how most homeowners view finances?