what would you do?

[billybonks]

I need some expert advice on what you would do.
Bought a house in Fort Mcmurray Sep 2008, and my rate is high, I want to lower my monthly payments.
With intrest rates down, what options would |I have.

Fort Mcmurray - intrest 5.59% payments $3,020.00 5 yr term closed 40 year /CMHC -Mature date - july 2013

Saskatoon - intrest 4.1% - payments $1,000.004 yr closed 25 yr CMHC - mature date may 2009
Saskatoon - intrest 5.15% - payments $ 470 5 yr closed 25 yr CMHC - mature date july 2012

 

[mortgageman]

QUOTE (billybonks @ Mar 8 2009, 11:34 AM) I need some expert advice on what you would do.
Bought a house in Fort Mcmurray Sep 2008, and my rate is high, I want to lower my monthly payments.
With intrest rates down, what options would |I have.

Fort Mcmurray - intrest 5.59% payments $3,020.00 5 yr term closed 40 year /CMHC -Mature date - july 2013

Saskatoon - intrest 4.1% - payments $1,000.004 yr closed 25 yr CMHC - mature date may 2009
Saskatoon - intrest 5.15% - payments $ 470 5 yr closed 25 yr CMHC - mature date july 2012

Without knowing more about the loan to value ratios on your current properties, and assuming you want to increase cash flow or reduce the strain of paying the Fort Mac mortgage, I`d suggest the following:

When your 4.1 interest rate mortgage in Saskatoon comes up for renewal in May, change it to a variable rate mortgage and extend the amortization out to 35 years.
Use the money from the extra cash flow to make larger payments on the Fort Mac property and reduce the size of the principal.

You`re going to have big payout penalty on the Fort Mac mortgage because it`s a relatively high rate, has a large balance and is pretty new so you`ll probably want to wait a while before refinancing that one. Most payout penalties are calculated under the more punitive interest rate differential formula these days.

It looks like the second Saskatoon mortgage is for a relatively small amount. You might decide to refinance that one if you`re prepared to pay the penalty. If the numbers make sense, refinance that one to a variable rate mortgage with a 35 year amortization. Take the extra monthly cash flow and apply that to the Fort Mac mortgage as well.

All the best
Jason