Bought a house (primary residence) last October 2018 with a mortgage of $302,400 at 4.625%, 30yr. P&I is ~$1550/month. Current balance is ~292k. Currently splitting extra $ between a taxable account and the mortgage.
Goal is to have it fully paid off at FIRE in 7-10 years.
Since then interest rates have fallen a bit, and I am considering refinancing to a 15 year note at 3.75% with no points/fees. A new 30 year note is around 4.25%. Looks like a refinance would still cost ~2-3k for a new appraisal and title search / other fees but haven't nailed down that number. Would increase the P&I to $2100 / month.
Does it make sense for me to refinance to the 15 year ASAP? Looks like the breakeven point would be about a year.
But back to the point.
I feel like the 15 versus 30 year mortgage question is generally made overly complicated and I think there are 2 points you need to remember.
1. The 'savings' in a 30 versus a 15 year fixed is pretty much irrelevant. With the time value of money for the most part the value of the loan to the bank is the exact same. So all that interest that you have saved yourself by paying off early is discounted to the value of you paying the mortgage off today with today dollars. I am not going to get into the math unless you request it but I am sure you can find a you-tube video explaining this further if you need it.
2. I generally don't like 15 year mortgages because they take away a ton of flexibility. In the "pure finance' way of thinking about #1 the loans are the same. But in the real world when you lose your job and man having to make smaller payments on a 30 year mortgage is much easier then the larger payments on a 15 year.
If you insist on paying it off early. I always like the idea to get a 30 year and just pay extra on it and you have pretty much made yourself a 15 year mortgage just like that.
Wow I just reread your post, you have not even been in the house six months, and your already trying to pay it off? I would at least get to a year or two in the house before you do this.
How old are you, and what is your life situation here? If you are single but could see marriage and kids in the future I would not focus on pay-down, if your pretty well set in your house needs it makes a bit more sense to go for it. IMO putting extra money into your mortgage then required in the payment is essentially burying money into the basement of the house. Sure it might feel nice to have it down there, but its hella hard to get out.