Home Purchase Mortgage Calculators
Mortgage Program Calculators
If you are considering retirement, our recommendation is that you pay your mortgage off as soon as possible so that you own your home FREEandCLEAR. Based on the information you provided, our preliminary recommendation is that you sell your current home and apply the equity from that property plus all or part of the money you inherited to the purchase of the home you want to retire in. Buying the smaller home would likely enable you to reduce your monthly mortgage payment plus you lock-in a mortgage at today's lowINTEREST RATES
It is impossible to predict how interest rates will change in the future but rates are currently at historically low levels and are more likely than not to be higher over the next several years. For example, the monthly mortgage payment for a $165,000 loan based on a 30 year fixed rate mortgage with a 3.75% rate is only $765, which is likely significantly lower than your current monthly payment.
You can use our MORTGAGE CALCULATOR to determine your monthly payment based on different loan amounts and interest rates.
Your other alternative is to apply the inheritance to your current mortgage and then refinance the mortgage with the new, lower loan amount. Refinancing your existing mortgage after paying down principal would allow you to lower your current monthly payment and you would remain in your current home. Unless you have an adjustable rate or interest only mortgage, paying down your current mortgage balance would not lower your existing monthly mortgage payment although it would reduce the length of your loan (which saves you interest expense). You can also request that your current lender adjusts your mortgage payment after a significant reduction in your principal loan balance although not all lenders agree to this.
Ultimately your decision comes down to your financial priorities and objectives but I hope this response outlines your options.