Reply to trying to advise friend -- is it wise to refinance to a 15-year mortgage?

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[quote=Anonymous]Friend has a 3-year with a pretty good interest rate but pays PMI (roughly around $120).  Friend can refi with a 15-year at a whole point lower and drop the PMI (due to increased value).  Friend is about 4 years into the 30-year.  The refi would add roughly $450/$500 to monthly payment but would pay off house by age 55 instead of age 66.  Friend doesn't anticipate moving.

Friend (it's actually a married couple) can afford the increased payment, but they're still a little nervous about it.

Lots of articles out there suggest it's worth staying with a 30-year in order to have more flexibility (so long as the 30-year rate is good).   Not sure of the implications for taxes given the reduced interest deduction.

Advice?  I'm torn about what to recommend.  I grew up in a working class family, so on the one hand, I'm naturally biased toward having a house paid off (but the conventional thinking on that seems to have changed).  On the other hand, growing up in a working class family that faced layoffs, I also see the value in keeping monthly payments low in case of unforeseen issues.

Any financial wizards out there who can offer some insight into this question?   [/quote]

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