Q: I'm 49 years old, and want to be secure in my retirement. I know there are no guarantees, but want to pay off my mortgage ASAP. I'm going to refinance my mortgage and wonder if I should go with a 15 year FRM instead of a 30 year FRM? Thanks for your help.
A: It's possible to save thousands of dollars in interest paid over the life of a mortgage by going with a shorter term. The downside is that you'll have higher mortgage payments, a situation that you may not wish to risk given the current uncertain economy. A compromise could be made by refinancing to a lower mortgage rate at 30 years, and making additional payments to mortgage principle each month. This provides flexibility to make additional payments, but does not mandate higher monthly payments. If you go this route, make sure that your refinance mortgage does not include penalties for prepayment.
Q: I hope this isn't a stupid question, but what's the difference between a mortgage and a deed of trust? I've heard of mortgages, but never a deed of trust loan. Which should I get?
A: The term "mortgage" has become synonymous with home purchase and home refinance loans, but state law determines whether you sign a mortgage or deed of trust. Both documents are recorded, typically in the county where your home is located, and publicly document your mortgage as a lien against your home.