Hi All,
So, before discovering this board I thought I was brilliant for switching to a 15y mortgage when I refinanced ~1.5 years ago.
So I currently have a home with the following:
Approx value: ~$550k (side bar, before I'm accosted for having "too much house" this is actually a modest house, plus our handbuilt ADU that is rented out)
Mortgage: $340k @ 3.875%, 13.5 years remaining
Monthly PITI: ~$3017
Property Taxes: ~$3k/yr
I know now that being on a 15y vs. a 30y with current rates isn't the optimum move. On the other hand, the mindset of being mortgage free a.s.a.p. was, and frankly still is, enticing.
Why am I considering going back to a 30y?
1) We just had our first child, and are considering having my wife be a SAHM for the next 5-7 years.
2) I am quitting my job and starting a business this year. While I anticipate my earnings to be higher eventually, I accept that there will be a transition period with unknown income and unknown duration.
So for those reasons, a reduction in monthly expense would ease the transitions.
On the other hand:
1) Closing Costs
2) While there is a theoretical gain to being on a 30y vs. a 15y, that is only if I actually take all the difference in expense and invest it. I'd love to say I will always do that, but it's hard to say that with certainty, especially with so many financial variables in the near future.
Further confusion:
I plan on opening a HELOC a.s.a.p. to act as a buffer when I start the business, perhaps this weekend. Does that affect this discussion at all? If I have a HELOC open, and then later re-fi, does that affect the HELOC?
What I'd love to do is get the HELOC now, wait and see how the transition goes and see if I can still comfortably swing the 15y, and if not re-fi at that point. There are two problems with that plan.
1) I will have quit my job so I won't have the income history. Would I even qualify to re-fi at that point?
2) Interest rates may be higher?
Anyway, I hope that's enough info. I appreciate all your thoughts.
Cheers,
James