Ah, the asterisk. Several reasons, actually.
I'm an original member of the DPOYM Club. I live in a HCOLA and always have, so I'm used to bigger mortgage balances. I've stated previously that for a sub-100k mortgage balance, the advantages of delaying payoff are somewhat less significant. Also, i understand that many lenders won't give sub-$100k mortgages the time of day.
Mortgage rates are insanely low right now. If you are a proven disciplined saver, my inclination would be to do the 30 year cash-out re-fi for $100k. Invest the difference and buckle up for a bumpy ride. I believe that in the end, having a mortgage and investing the difference is still the winning approach.
Whoa, whoa, whoa. My wife talked to me, prompting me to re-read your words, and I understand your words differently now. Or rather, I see how I can apply your words to my situation.
In the next few years I will start paying for school costs for one kid, and then a second kid, and these costs are expected to be 20k/yr at their highest. Originally I was going to refinance to get a lower payment, allowing me to free up cash month to month to pay for the schooling. But this was never going to be enough for all the schooling, and so regular chipping out of the nest egg was going to be an acceptable (last) option.
Now, I see that if I cash-out re-fi and *do* drop it (30k) into (VTSAX) savings, it will bump my nest egg (and over 30 yrs I'll come out waay ahead of my 3% borrow rate). Meanwhile, I won't have quite as much month-to-month to pay the schooling, and I'll have to dip into the nest egg a little quicker. But dipping out of the nest egg will never be more than 2%, meanwhile my investments continue growing at >8% long-term, and I'll be way ahead, down the road, eventually. Whew. My head shouldn't hurt this much.