Kec & Quirk, Lisonwal mentioned "$7,500 in closing costs"... but you need be aware of several things; Prepaid items (escrowed deposits for property taxes, and hazard insurance) add to the "cash required to close" but are not actual costs. The deposits they are replacing from the previous lender's servicing department are refunded generally within 3-6 weeks. NONETHELESS... many non-financial people look at their "bottom line" of their GFE and think "oh my God, that's "closing costs" ". NEXT; Lisonwal hasn't told what the buydown costs are for the interest rate they have locked. At a 5% coupon, depending on their loan-to-value, the loan size itself, their credit, and other factors, they may have a fairly sizable buydown included in their "closing costs." This is definitely not particularly a BAD thing, as it may have a breakeven point in their interest savings at a fairly short period. AGAIN; Taking a 30 FRM at "no points" or even "no costs" (when such a thing was actually available) is the MOST expensive money you can borrow, and hardly conservative in most cases. LASTLY; In the current mortgage meltdown environment, the back-end bond buyers are refusing to buy loans at enough of a mark-up for the lending banks to advance ALL the cash costs of the transaction itself. The bond buyers are offering a maximum of about 1.5% of a closed loan, while the actual costs run about 3-5%, with a cash minimum around $3,500+. Because of this the "no cost loans" of the past are... in the past. Folks who have sufficient equity to have their closing costs financed are still able to do so... but there are no "free" mortgages (beside the obvious TANSTAAFL reality.) Besides... lender-paid loans only made sense when rates still had the potential to drop lower... so taking the inflated higner interest rates that were offered in order to have the bank pay all the cash costs was something people would do on a speculative basis. No longer is it financially intelligent nor realistic to take a higher interest rate (simply in order to get it for "free") with the argument that you are saving yourself the ability to once again refinance when rates drop in the future. Cheers, Dave Donhoff Leverage Planner

Hi Eosinophil, FIRST of we need to back away from the minutiea... up, up, up to get some bigger picture perspective, like an architect starting with very simple pencil sketches on a blank piece of paper... so that we can THEN come back down to the nitty-gritty and micro-fit the situation to your specifics. What is more important to you; Eliminating your outstanding leverage balances on an accelerating basis, or stopping the monthly bleeding? (These are at counter-points for you currently.) Are you more concerned about the balances on one property versus the other... or about your overall family position on balance? How much accrued liquid cash reserves do you have socked away? How much is your gross family monthly revenue? How much is your current gross (including minimum payments for all debt and homes) family cost of living? You are paying to rent the money you are using for retaining the ownership of the old home (the interest costs.) This interest is a "sunk cost" each month you pay it, if you have no tenants paying you for its useage. Is your continuing ownership giving you *any* appreciation currently? (Keeping in mind that market appreciation is a VERY tentative guess, at best, in the current environment... and if it is negative, you need to honestly figure it that way as well.) IF so, how much is the appreciation when calculated into monthly dollars? How much of your sunk interest costs are being ofset by your potential monthly appreciation gained? Whatever your sunk costs of interest, minus your dollars from appreciation (or plus the dollar costs, if depreciating currently,) is what you can call your "monthly burn." This is the consumption of your net worth you are incurring to continue carrying this property. NOW... this home CAN be sold (gotten under contract with a 30 day escrow period, or less) within a 2-6 week marketing time, AT SOME LEVEL OF PRICE, AND ADVERTISED EXPOSURE. This "price level" is what we call the "quick-sale price value." If your agent were to (honestly) determine the realistic quick-sale price level in that local market... it would likely be lower (perhaps much lower) than where you are holding out right now... and the agent would likely need to ramp up some significant marketing costs... which they might only be comfortable doing with some funding (or guarantees) from you. All of this, naturally, is going to be a revenue burden off of what you were previously hoping to sell your home for. NONETHELESS... this is a numeric exercise that is CRITICAL to do... RIGHT NOW... because it will give you the numerical difference between where you are right now in realistic net worth, were you to do this immediately..... VERSUS how much you are "burning through" on your monthly burn rate if you simply close your eyes, cover your ears, pray really really hard, and just keep waiting it out. KNOWLEDGE AND AWARENESS IS POWER... and you can't make an objective financial decision unless/until you have the actual facts in front of your face to review and think about. ========================================================= OK... soapbox aside..... *IF* you decide that you have reason to believe that simply waiting longer will actually be worth your while in a higher sale price... then there *is* investment property financing available in the range of 3.5% to 4.5% APR, on an interest-only basis, up to 70-75% LTV, strictly on a fully documented (income, employment, assets) basis... which could very significantly reduce your monthly burn overall. Its something I have at my firm... but not to be 'spammy' there may be other brokers (perhaps your regular loan broker) who have it as well. Its not a retail program, so you'd definitely need to connect with your broker for it. ========================================================= ALL THINGS CONSIDERED... (And in truth, we haven't seen enough details to truly consider all things...) I would *PROBABLY* be leaning toward advising you to take a deep breath, swallow hard, plug your nose... and have your agent re-price the home to the local quick-sale price... and get it over with while we're in the summertime "moving & home-buying season." All the best! Dave Donhoff Leverage Planner

Hi MoAtWork, You have a car with only one forward speed, I assume - if you are so slow? I sometimes use fully secured line of credit using equity investments as collateral. I don't worry about paying on principal that much and the bank doesn't worry if I don't. As I use the funds generated to buy more investments, making the interest deductible, that is a help. I can make payments on pricipal at any time and in whatever amount that I choose. Which I do, as it suits me and have money on hand. For people who, having used such a loan at lower interest rate to reduce interest rate on auto or credit card debts, might be tempted to go out and rack up new credit card debt in significant amounts, refinancing to pay off the current credit card (read "debt" card) debt is usually a poor idea. Just gets you deeper into debt - and now you're paying on those newly created credit cards' debts at much higher interest rates, again. Many borrow to buy a car but pay cash for investment programs. Up here in Canada I call that an unwise move. If I borrow to buy a car, unless I use it for business (not including driving back and forth to my regular place of employment) the interest is not deductible. If I pay cash for the car and borrow to invest, that makes the amount of interest paid deductible. I've suggested to some clients on occasion that they liquidate their investments, use the proceeds to pay off their car loan, then borrow again to buy back the investments. I figure that deductible interest beats non-deductible interest (at the same, or even comparable rates) every time. I bought a 1990 Dodge Colt, 1.5 litre engine, standard tranny, in summer 1997, with 138,000 km. (something over 85,000 mi.) on it, paying about $2,700. I've had to put some repairs on it in the more than 6 years that I've owned it - not an inordinate amount, in my opinion. During a recent trip from London, Ontario to Edmonton, Alberta via Regina, Saskatchewan, we doubled that amount of mileage on the odometer. It has something over 282,000 km. on it now (over 175,000 mi.) During the trip, it sat outside overnight (no block heater) when temperature in the early morning was -39 degrees (considering wind chill, something like -50 degrees). Thick oil meant that it turned over very slowly in the morning - but it fired in about 5 seconds. Oil light stayed on, so I shut it down after about 5 seconds. Let it sit for about 10 seconds, started it again, ran it for about 6 seconds, oil light still on, so shut it down again. After about four such starts, engine was turning over about usual speed while starting. Started over a dozen times before the oil light went out. It's a fuel-injected gas engine - which I thinks helps the starting in extreme cold like that. When I ask new car salespeople if they can get me about 40,000 miles for about $4,000. - 5,000. - they tell me to get lost. Driving the 5,000 mile or so with a leaky gas tank that could be filled only slightly under half full, my son complained about buying gas about 50 times. I told him that if that was the most major problem that he had - he was laughing, for he had very little to worry about. I'd bought a rusty tank for $75. here, but didn't want to install it, as it was so rusty. Garage man said some recyclers bring them in from AB or AZ (dry climate) for something like $110., he thought - but on investigation it turned out to be over $300. So, while I was in Alberta, I bought a tank for $50. and hauled it in the back seat for about 2,200 miles. Took the car to the garage to have the tank installed, this afternoon. Recently received an offer from Citibank to lend me up to $3,500. (possibly more). When I called to ask them what rate of interest they'd charge, the respondent said it depended on the amount that I borrow, but the full $3,500. would cost me ... 26% per year. I told her that I just received a report from my bank on my fully secured line of credit, which is unused at the moment - at offered rate of 4.5%. So I thought that I'd not be taking them up on their offer, any time soon. Ain't life fun? Especially when one's retired, with three or four pensions and enjoying good health. Nice not to have to go out and scrape ice off of the windshield in the dark before going to work. When I bought med insurance for travel through U.S., cost was $28. as I had no pre-existing medical conditions - would have been $52. had I had some. Enjoy your winter, all. ole joyful

Actually the two scenarios aren't the ones to compare, because if you keep the existing mortgage (~$1000/mo payment) and add $500, you'll be paying $1500/month. If you refi, your payment will drop to $886/mo, and adding $500 to that gets you just under $1400/mo. To equalize out these two scenarios, I'd instead compare paying $1500/mo on both options, since you can presumably afford that. So it would be $500/mo extra on the existing or $613/mo extra on the refi. Running an amortization on both, you'd pay off the loan about 5 1/2 months faster with the refi, saving around $8000 in interest. Given that it'll cost you $2500 to do this, you end up winning if you refi. Have you looked into getting a HELOC instead, assuming this is a low percentage of your home's value? Closing costs are lower on a LOC, and if you are going to be paying it off in 4-5 years, there's minimal interest rate risk. How do the rates on a 5/1 ARM compare? That would be something else to consider, since you'd have it paid off by the time the rate resets.