I'm planning to refinance the mortgage given the low rates these days. Need to make a choice between a 30 yr fixed and a 15 or 20 yr fixed. Monthly household budget can accommodate any of the mortgage payments. Currently on a 30 year fixed with a $1600 payment
Choice 1. 15 year fixed rate with a $2100 payment. This would save ~$180k in total payments versus current mortgage. At the end of the loan, keep paying the $2100 as extra payments to retirement accounts (IRA, HSA, stocks/bonds) for another 15 years, anticipating 5-8% return.
Choice 2. Refi to a new 30 yr fixed rate with a new payment of $1450. This would save ~$60k versus current mortgage. Time to pay off closing costs is <4 years and we expect to be in the house for 10-20. Use the savings from the lower payment to increase contributions to retirement accounts as above, i.e. ~$150 per month for the 30 years. This means having a mortgage payment until I'm 79, but in 30 years $1450 will constitute a much smaller slice of the income pie.
Question 1. How do I calculate the overall benefit of each choice e.g. = sum (total $ cost of the mortgage ($-ve), total value of investment ($+ve)) over the time period? I feel like I'm 90% of the way to the solution already but just not certain.
Question 2. Am I missing any glaringly obvious factors, -ve or +ve?