Do I Need To Refinance?

Dave thinks it's better for Beau to refinance and get out of his interest-only adjustable rate mortgage, for one big reason.

QUESTION: Beau has an 80/20 interest-only adjustable rate mortgage. They have 7 years left before the rate adjusts. He has car debt and wonders if, once the car is paid off, he just pays into the 20 portion of the loan and knocks it out before it adjusts. Dave wants him to refinance, for one reason.

ANSWER: I would pay to refinance, because the rates now are so friendly. When you start talking about financing a property at 6% or so, that’s a pretty sweet world. Then you don’t have any interest-only or prepayment issues or anything that could sneak up on you. If I were in any kind of interest-only or adjustable rate mortgage, I’d get out of it. It’s a fabulous time to refinance.