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May 11 2009 12:00AM


I am considering refinancing my mortgage from a 5.5 percent, 30-year fixed to a 5.25 percent, 20-year fixed. Going with a 20-year mortgage will cut four years off the current loan. I am 45 years old, married, with three children. I have two questions:

  1. Should I plan to pay off my mortgage by the time I retire?
  2. I have $13,000 in credit card debt and wondered if I should roll that into the mortgage. Doing so would save me $200 per month.


FPA member, Jennie Fierstein, CFP®, of J. Fierstein Financial Advisors, said paying off a mortgage by the time you retire is dependent on many factors. "Unfortunately it is not cut and dry," she said. "Going from a 5.5 percent to a 5.25 percent interest rate would really depend on a) how long you plan to remain in the house and b) calculating how long it would take for you to recover the points and closing costs in doing the refinancing."  A mortgage broker could run those numbers to determine where the breakpoint would be. Additionally, have the mortgage broker calculate the savings if your mortgage were instead refinanced for 30 years, not 20.

As for the credit card debt, "I encourage you to do everything you can to accelerate paying off that credit card debt, with or without refinancing," she said. "Go through your expenses, find places to cut back in discretionary spending and apply toward that debt."

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