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Dear MarketWatch,

I am 66 years old and have a mortgage with $47,000 left on it. My interest rate is 3% and it’s a 30 year fixed rate mortgage. I pay $136 a month.

My mortgage was due in 2027. But my old lender decided to sell my loan to someone else and now it looks like my mortgage won’t be paid off until I’m 90 years old.

I want to refinance my loan to a 10 or 15 year fixed rate mortgage to pay off the loan sooner.

So my question is, is it a good idea to refinance? Please advise.

signed,

No success

The big step“is a MarketWatch column that looks at the ins and outs of real estate, from looking for a new home to applying for a mortgage.

Have a question about buying or selling a home? Want to know where your next move should be? Email Arthi Swaminathan TheBigMove@marketwatch.com.

Dear, no luck,

Looking at current mortgage rates, I’d say you’re better off not refinancing your 30-year fixed mortgage.

I know you want to pay it off quickly. But you got a mortgage at 3% interest. You caught a historically low interest rate that we may not see again for years.

If you want to refinance, your monthly payments may increase. The average 15-year mortgage rate is over 5%. I’m not sure you want that because you may be retired now or planning to retire very soon.

If you’re considering a cash-out refinance, David Krebs, a Florida-based mortgage broker, said it can be a good idea as long as you have enough equity in your home and the property’s value is high. enough.

If you have an “urgent need for cash,” Krebs says, “it’s worth paying a higher interest rate for access to equity.” Urgent needs may refer to medical bills or urgent expenses. This would be an emergency and I caution you not to do it if possible.

Krebs also suggested considering a reverse mortgage, where you pay off your mortgage using your home equity and then take out some of the remaining equity in the form of a monthly payment, lump sum or line of credit. But before choosing this option, do your own research.

You also said that your mortgage has changed hands and – based on the fact that you say you’ll be 90 when it’s paid off – the term has been extended by 20 years. I’m not sure why this happened. Krebs agreed that it didn’t make sense.

Possibility. You can enter into a loan modification with either the old or the new lender. A loan modification is a mutual agreement where both the borrower and the lender sign a written agreement modifying the terms of the loan. In your case, the loan repayment period has probably been extended by 20 years, Krebs explained.

But “it’s not normal or legal for a lender to unilaterally extend the term by 20 years,” he added. So double check that you have signed a document that extends the term of the loan.

And let’s return to the question of refinancing, with a final warning. The interest rate on a 15-year fixed-rate mortgage loan reached 5.54%. If you refinance, the price of getting out of debt sooner can eat into your monthly budget.

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