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Finding the Silver Lining in Foreclosures
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Now we're three years down the line. Let's look at some of your options:
First, you can try to sell the house. While we are in the worst housing market in the past 40 years, more than 5 million homes will be sold this year. One of them could be yours. There are still properties that are receiving multiple offers.
How can you make that happen? Your house will have to look better than all other homes in the neighborhood and be priced the most competitively. Then everyone will look at your house, and someone could make an offer.
Your second option is to refinance. Because you don't plan on staying in your house for too long, I would refinance to an interest-only loan. While you won't add to your equity, you will cut down dramatically on your house payments. If your credit it good, you should get a great rate.
Another option would be to rent out a room for a year or so. This would help defray expenses even as you prepare the house for sale.
If someone has a cash-flow problem, there are only two ways to solve it -- cut spending or increase income. In your case, you might try to do both. If you can add some tutoring hours to your week (which might be tough, given how much work teachers already do), it could help your cash flow.
A final option may be to do nothing. You need to investigate your current loan terms and determine what might happen to your interest rate if rates remain stable for the rest of the year.
You may find that your loan is set to the 1-year Treasury rate plus a margin (or markup) of about three percentage points. That's common. If that's the case, your interest rate may go down when it resets in September and stay that way for another year.
You not only would save the cost of refinancing, but also would buy yourself another year in which you can choose the best time to sell your home. If your loan is set to another standard and that standard today would cause your interest rate to go up, the "do nothing" option may not be the right move.
Is there ever a time where it is ideal to pay off my mortgage?
There are a number of reasons to pay off a mortgage.
First, I believe in doing whatever it takes to help you sleep well. If paying off your mortgage helps you catch a solid eight hours, that's a good reason -- even if keeping your cash invested elsewhere would be the better choice financially.
