Should I refinance my fixed 15 year 5% mortgage for a fixed 30 year 5.75% mortgage to free up cash flow???

I am thinking of refinancing so I can free up monthly cash flow to invest.

I have been looking at a refi from www.madrate.com and they offer a $289 fee (includes credit, doc prep, processing, underwriting, tax service & flood certification fees)

I have been reading various advisor recommendations to have a 30 year mortgage rather than a 10 or 15 so to free up investment cash flow. (www.ricedelman.com) Rates are still pretty low right now and are very attractive.

I know that when I pay mortgage interest, it is paid from my after tax income. It is also tax deductible at the end of the year.

I also know that when I earn interest in the stock market, this is pretax interest. If I earn 8% in stocks, my effective rate earned will be lower since I need to pay taxes on it at the end of the year as well.

I need some feedback if you think this would be a good idea or should I stay where I am at?

It depends on how long you have left on your 15 year mortgage. How much cash is it going "free up"?
Mortgage advisers want a 30 year because they are earning more money in interest off you.
What you have to do is see how much more you will be spending in interest with a 30 year vs a 15 year. .75% may not seem like that much but over time it really adds up and I bet you loose more money then would save or make in the stock market.
It is a very risky move and I would just stay where you are.
Are you still paying PMI and how much is it? If so how long until you can have the house reapreasied to see if you have 20% in the house? You can take the extra money from that and invest it.
Also be very careful when looking at online refinance companies. 5.75 seems to good to be true for a 30 year fixed. 6-7% is the norm for a 30 year.

a lot depends on your situation. is is hard to make the 15 year payment? If you have plenty of cash, keep the great 5% rate. After all, you are paying down your balance like a mad fool!

Are you crazy? NO, you should not refinance at a higher rate for a longer period of time! You will spend more money in the long run.

no, don't go fixed at all, rates are dropping, go variable with the option to lock in if rates rise

Keep the 15 year, and pay that B@#*$ off...That'll free up plenty cash, then dump that mortgage payment into another investment....

I just got out of the mortgage feild, after being a mortgage broker for the last 8 years.

You have a really low intrest rate @ 5 %, But how long have you been in the mortgage. If you are 3 or 4 years into the mortgage then a good deal of your payment is going directly towards the principle intrest every month.

If you go to a 30 year fixed @ 5.75, it sounds like you are only paying .75% more, but the fact is that you will not start to pay off the principle for about the next 10-15 years.

Go online and look for an Amortization Calculation, and plug inwhat you curently have and then plug in the mortgage that you are looking at, and then look at the reall cost of moving into a 30 year loan.

I would leave the mortgage that you have alone if you can afford the payment!

I agree with Jerry P.
Don't change it as you will be paying out a lot more. Pay it of as soon as you can and Imagen the money left over once you have no more mortgage!

Rate is just that its a rate, I follow ric edleman very closely, lets look at this for a second, you have a 15 year mortgage lets say your balance is $250,000 and your rate is 5% you are now paying a payment of $1976 a month, yes you are paying down principle faster, but at the same time you are not investing, NOW lets take this same mortgage and put it to a 30 year term at 6% (this is a more realistic 30 year rate) with the fee you are stating, your payment drops down to $1499 a month, and yes you are not paying off your house as quick, but lets look at what you accumalate, You take the payment saving of $475 a month and invest it, making a rate of return of lets say 5% interest (I like being conservative). in 15 years you will have set aside ruffly $148,000, which would be enough cash to payoff the balance of your home, but lets say you keep investing for the next 15 years you still have left, you will have saved at the same 5% rate of return almost a 1/2 million dollars and own your home free and clear, I dont know about you , but I sure would love to have that money in cash, not in a home that I would have to refinance to get it back out,

Listen to ric, a house is where you live not where you keep your assets, assets should be in your bank account, not in the banks account!!!]


I disagree with everyone on here, save money where you can access it immediatley invest and grow RICH~!!!!!!!

if you want to get very techinical..

how much is the additional .75% benefits you?

we know there will always be inflation. and .75% at 30 years, fixed, may not be as bad if we calculate the net persent value of that including the factor of inflation rate. also.. by doing so with the addition cash flow, can you invest that somewhere else and make more than the additional interest you will be paying your lender?

if yes then go for it, if not sure then stick with current one.

you will have to go through some serious finance equation to get the net present value of what you are planning to do to see if you will get a positive result at the end. Good Luck!

Do not refinance your house to get money to put in the stock market. You could lose your house in the fifteen more years that you are making a mortgage payment if you switch.

Have you seen any 0% interest credit card rates? At least those are unsecured debt. See if you can find one with low or no transfer/advance fees. Last year they were plentiful and I was able to secure $100,000 to invest. I have made about $8,000 so far with no interest payments, you just need to make the minimum payments each month.

I don't know about your situation but 15 years is a long time to be stressed about a home payment. Get the 30 year payment so that you can live easier and pay that measly .75% more a year and cut your payment in half.

Assuming that you have plenty of money to even get into a 15 year mortgage, then I am guessing that with your new 30 year payment, you should have plenty more to pay against principal to combat that extra .75% Remember that $50 extra a month cuts off 7 years off the life of the loan.

I am 30 right now and they is no way in hell that I am going to struggle and be stressed out until I am 45. Money is money. My life is more important to me so I would rather live easily and have a paid off house when I am 70.

Go for it. Get that BMW you always wanted too because with half the payment, you can afford it now!

NO.

your 15 year 5% fixed is a sure thing while whatever you can make (or lose) in the stock market or in any other investment can go all over the place.

in fact, i'd use any free cash you already have to pay down the mortgage even faster. to me any mortgage interest deduction is inconsequential compared to the peace of mind and sound financial base of being mortgage debt free.

(the only time i would even consider refinancing to a longer term or maxing it out is if i had rental property in a rising rental market, when my tenants are paying off my mortgage(s) for me...)