Hi everyone,
I have so many different questions but I thought I would start by asking your opinion about the most immediate one. I am 43, married (wife is 41) with one 5 year old son. My wife and I make 200k combined per year in salary. We are both tenured college professors so that gives us (I hope) more job security than many, so that is the one good aspect of our situation.
Some facts to consider here: we both contribute 7.5% of our salary to the State's DB pension plan. We both will be vested within 6 months. In addition, we each are now contributing $1000 per month in our respective retirement plans with TIAA-CREF. However, prior to just recently, we were barely contributing at all. In total, combined, we have $160k in our plans. Neither of us right now really know much about how to allocate what we do contribute, but that question is for another day.
We own two homes, both significantly underwater. One is a beach house. We owe $589k (1st mortgage) and $77k (2nd) on it. The interest rate on the 1st is 3% and on the second is 5.25%--both are variable. This house is a rental and we (for the first time) made a profit on it last year due to the falling interest rates. We made $125 according to our accountant! This house would probably appraise for $500k today.
Our other house is our primary residence and it is the subject of my question. We owe $547k (1st) and 75k (2nd) on it. The first mortgage is at a rate of 6.375% 30 year fixed and the second is at 5.35% variable.
We also own an empty beach lot which we bought for 400k and is now worth 200k. The silver lining here is that we don't owe anything on that!
I would like to refinance something to take advantage of today's low rates. Our rental is so far under water that this is impossible, as far as I can tell. I had always thought; however, that our primary residence had not significantly declined in value. That was until I sought a refinancing. As it turns out, our home has declined in value significantly. The bottom line is that I was told that if I could pay down the first mortgage from $547k to 417K then I would have a conforming loan and that a 15 year fixed rate on that loan would be 3.5%. I think our payment would go up a just a little bit but not significantly. It would reduce the term left on our loan by almost 9 years, which is very attractive to us. The problem is that it would involve us paying $135k to make it happen! We only have $100k in savings--it is currently making .1% interest--but my father volunteered to open a CD at a local bank so that I could borrow the rest against it if I wanted to. Do I do this?? Something is telling me that hurling this much money to lower the rate on our primary residence is just not worth it. However, paying off the house in 15 years dovetails nicely with our plan to hopefully retire at that time. I would like to sell the house in 15 years, buy a condo on the beach and live off the proceeds of the house, our limited supplemental retirement accounts and our DB payments.
I would love to hear your thoughts about what we should do. As you can probably glean from my post, we are pretty clueless. Please be gentle!
I have enjoyed perusing the boards and I thank you in advance for any help!
I have so many different questions but I thought I would start by asking your opinion about the most immediate one. I am 43, married (wife is 41) with one 5 year old son. My wife and I make 200k combined per year in salary. We are both tenured college professors so that gives us (I hope) more job security than many, so that is the one good aspect of our situation.
Some facts to consider here: we both contribute 7.5% of our salary to the State's DB pension plan. We both will be vested within 6 months. In addition, we each are now contributing $1000 per month in our respective retirement plans with TIAA-CREF. However, prior to just recently, we were barely contributing at all. In total, combined, we have $160k in our plans. Neither of us right now really know much about how to allocate what we do contribute, but that question is for another day.
We own two homes, both significantly underwater. One is a beach house. We owe $589k (1st mortgage) and $77k (2nd) on it. The interest rate on the 1st is 3% and on the second is 5.25%--both are variable. This house is a rental and we (for the first time) made a profit on it last year due to the falling interest rates. We made $125 according to our accountant! This house would probably appraise for $500k today.
Our other house is our primary residence and it is the subject of my question. We owe $547k (1st) and 75k (2nd) on it. The first mortgage is at a rate of 6.375% 30 year fixed and the second is at 5.35% variable.
We also own an empty beach lot which we bought for 400k and is now worth 200k. The silver lining here is that we don't owe anything on that!
I would like to refinance something to take advantage of today's low rates. Our rental is so far under water that this is impossible, as far as I can tell. I had always thought; however, that our primary residence had not significantly declined in value. That was until I sought a refinancing. As it turns out, our home has declined in value significantly. The bottom line is that I was told that if I could pay down the first mortgage from $547k to 417K then I would have a conforming loan and that a 15 year fixed rate on that loan would be 3.5%. I think our payment would go up a just a little bit but not significantly. It would reduce the term left on our loan by almost 9 years, which is very attractive to us. The problem is that it would involve us paying $135k to make it happen! We only have $100k in savings--it is currently making .1% interest--but my father volunteered to open a CD at a local bank so that I could borrow the rest against it if I wanted to. Do I do this?? Something is telling me that hurling this much money to lower the rate on our primary residence is just not worth it. However, paying off the house in 15 years dovetails nicely with our plan to hopefully retire at that time. I would like to sell the house in 15 years, buy a condo on the beach and live off the proceeds of the house, our limited supplemental retirement accounts and our DB payments.
I would love to hear your thoughts about what we should do. As you can probably glean from my post, we are pretty clueless. Please be gentle!
I have enjoyed perusing the boards and I thank you in advance for any help!