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Old 06-23-2008, 04:24 PM   #21
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I'll add "cash flow" to the search. I have been pinched twice with high levels of home equity but with little after tax savings to live on during an uncomfortable situation.
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Old 06-24-2008, 02:06 AM   #22
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Originally Posted by ERD50 View Post
Now, relevant to the OP - if the $20,000 is truly dependent upon paying down the mortgage - then it is a no-brainer - you pay down the mortgage and say 'Thank You!'!
Yep. Accepting the money and applying it to the mortgage was never in doubt. In my original question, I asked that since the kids were receiving a gift of $20K with the contingency that it be applied to their mortgage, what were their options? Re-fi? Apply to principal resulting in a shorter term? Apply to principal and have the bank recalculate lower payments for the same term? Etc.......

Looks like they're going with the option of lower payments which is fine with me and seems like a reasonable choice given their options and their personal circumstances.

Thanks all for the comments and discussion.
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Old 06-25-2008, 05:47 PM   #23
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Find an investment which returns 5% and ask the gift giver to put money in that account for them. Once the mortgage balance is below 20k, pull the money out of account and pay it off, keeping the interest in the account for retirement.

Wellesley yields 4+% and returns more than 5% year over year, and might be a good option to suggest.
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