My father has a 30 yr fixed loan at 7.5% with 30k principal left with a little over half the term left.
I've been trying to convince him to try and get a cheaper interest rate for the last several months. He is very stubborn and believes that it is impossible to do so. He is on a fixed income any extra savings will help.
He's got some very misguided ideas. He thinks that he owes about 30k on the house because that is the principal but I try to tell him he owes about 100k to 150k.
The house note is around 900$ a month with about half going to principal and the a quarter to interest and the rest for taxes and insurance.
While getting a 4.5% interest rate may not save a lot that extra money at this point(maybe 50 to 100) could be used towards the principal each month to reduce the payoff time.
He says he was told by a banker that there is a law that prevents one from refinancing if you owe less than 30k on principal; which absolutely makes no sense to me.
I do realize most of the interest is paid up front. The problem here is save him. He has about 30k in savings which I've tried to get him to pay off the house in full(or even 10k to 15k) but he's totally against that idea.
So, what I really need answered is if basically I'm right in that 1. It may be possible to refinance to get a cheaper rate which would save him a few dollars a month. This would result in the house being payed off sooner by reinvesting the "saved" money(maybe a year or two extra). 2. Paying off the house in full or nearly so is the best option. Sure the first year would be rough but the extra money saved each money could be saved(although I doubt he would do so) and could be recovered after a few years(rather than being broke for the lifetime of the mortgage).
Other thoughts are appreciated too.