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Subject:  Re: Budget Help Date:  3/28/2014  11:12 PM
Author:  aj485 Number:  308058 of 312799

Also, my current mortgage is 15 year @ 3%. I'll look into refinancing, but I think closing costs will negate any savings unless rates are lower than I remember.

Au contraire. It depends what you refinance into. Is there a specific reason you want to have the house paid off in 15 years?

It appears, since you don't list any property taxes or homeowner's insurance, that your mortgage payment includes escrow for that item, so it's difficult to come up with specifics. However, for comparison purposes, the monthly P&I payment on a 30 year 4.25% mortgage (current rates) is $983.88. The P&I payment on a 15 year 3.00% mortgage (your loan rate) is $1,381.16 By choosing a 30 year mortgage over a 15 year mortgage, even at a higher rate, you would need $397.28/month less in cash flow/month, or $4,767.36 less per year. Closing costs would easily be paid out of the savings in less than a year.

And if you go for one of the PenFed adjustable mortgage products (the 5/5 at 2.875% or the 15/15 for 3.875%, your savings would be even more.

So - I would say that you are significantly limiting your opportunity to live on one salary by having chosen the mortgage that you are in. If you truly want to be able to live on one salary, you need to look at refinancing into a longer term mortgage. If you have a specific reason for wanting the house paid off in 15 years, and want to consider that you are living off of one salary and saving the other, then I would suggest looking at the additional $400/month or so that the shorter amortization period forces you to make on the mortgage payment as coming out of the 'savings/investment' salary, because you have chosen to put the money into paying off debt secured by an illiquid asset.

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