Should I refinance with higher interest rate?

Currently my parent is owning the house and paying month mortgage bill. Our monthly payment as of right now is $1400 monthly and fixed interest rate is 4.475%; the payoff amount(principal) is $82,000.

I would like to change the title of the house under my name (I guess buying it from my parent). when doing so, I have to refinance it with a 30yrs, fixed interest rate of 5.474%, loan amount(principal) is $88,000. monthly payment is $737.77. the fee settlement for refinance and everything will be act as a gift so there will be no money out of pocket to refinance.

The question is should I refinance?


1. The reason the payment before refinance is $1400 is because the mortgage originally $126000 and it include the interest charge, escrows, taxes... monthly.

2. after refinance, the monthly payment is $737.77 is because it includes the interest charges and...

3. They said I'm not qualify for 15 years due to my income.

6 Answers

  • 10 years ago
    Favorite Answer

    Something is not right with your numbers. Why would a smaller $82,000 loan with a lower interest rate of approx. 4.5% have a monthly payment of almost twice the amount of the larger $88,000 loan at a higher interest rate? If the numbers on your parents' loan are correct, then the house would be paid off in full in only about 6 years. Can you explain this first?

  • 10 years ago

    Not sure if this is feasible due to your parents plans (plan to buy again or not) but I'd just have them add you to the deed to ensure you get the property years down the line and pay them the mortgage... That's an awful lot of interest being tossed out the window over a 30 year period for such a small loan. Look into 15 years or just being added to the deed.

    Sure the interest rate is great, heck look at older mortgages (7% was considered great just a few years ago), but still it's unnecessary spending... I'm a penny pincher, so that's just my 2 cents lol :)

  • 10 years ago

    That is a terrible deal. You are taking a mortgage with a little over 6 years remaining and adding almost 24 years to the payment schedule. Have you considered a 15-year mortgage?

    Something is terribly wrong with your numbers. If you refinance $88,000 for 30 years, your payment should be $498.

    Get yourself a business calculator that performs mortgage calculations and learn how to use it. Keep practicing until you are an expert and know when you have numbers you can trust.

  • 10 years ago

    30 year fixed rates are running much lower than that. This isn't a question of refinance, but of ownership. Check rates and buy the house so you get the tax deduction and better payment.

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  • 3 years ago


    Source(s): Car History Report
  • 10 years ago


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