This is a VA refinance (IRRRL). The fees are the same no matter which choice.
yr apr p+i 15 3.875% $869 20 4.000% $718 30 4.000% $566
- IRRRL does not include possibility of taking out equity
- Almost all other debts are paid
- emergency fund is being rebuilt
- Current term: 20+ years remaining
- Current rate: 6.5%
- Current amount: $115k
- Current equity: $20k (would cost 10k in fees and closing costs to access this, so not really much here)
- Current p+i: $881
I am 48 years old. Bringing in $80k. Wife is stay at home mom to 2 kids. Retirement savings is woefully underfunded - to the point where we'll just call it barely begun. Saving for retirement is the focus at this point. Due to this, I am leaning toward the 30 year mortgage and putting the 320 savings directly into 401(k). Edit: 401(k) matches first 4%. In 2 years this increases to 5% (age based).
- I want to find out the current value of the 15 year mortgage and the 30 year mortgage.
- I want to estimate the value of the cash flow freed up if I choose the 30 year term.
- I want to compare the cost difference between the two mortgages with the estimate of what the cash flow could be worth.
My instinct is that the 30 year mortgage gives me flexibility to use the cash flow to build savings. Then once that is done, I can focus on paying down the mortgage, or sell the house to recover that equity. Have I gotten it completely wrong in some way?