Add to my mortgage

Add to my mortgage
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I just refinanced my home with interest rates about 5% I had to take cash out. The value of my home now is approximate $350,000 my loan is approximately 300 2 $350,000. My payments with insurance are extremely high I just came in to $70,000. My question Should I refinance and add the $70,000 chip drop my payments down? Or should I try to find something to invest first? Thanks for any help. Linda


Hi, Linda! Refinancing may be the best way to get your monthly payment down, although it kind of sucks that you have to pay all the refinance costs again so soon.

Your second sentence came out a little garbled, so I’m not clear if you would have to use the entire $70,000 to get your principal balance low enough to avoid private mortgage insurance. It would be nice to use some of that windfall to create an emergency fund, if you don’t already have one. An emergency fund equal to 1-3 months’ expenses can keep you from having to tap your home equity again if you lose your job or face another big bill. (I’m guessing something like that already happened, because you wrote that you had to take cash out this last time.)

We also recommend that people save 15% of their incomes for retirement. If you have a retirement plan at work that offers a match, that’s a great place to start (and maybe refinancing would free up some cash to do that). You also can contribute up to $6,000 this year to an IRA.

Please feel free to ask any follow-up questions and let us know what you decide to do!