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

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

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[quote=Anonymous][quote=Anonymous][quote=Anonymous]IMO... Unless cash flow is totally secure, get a 30 yr and pay it off in 15.  You can adjust if needed and pay on the 30 yr payback if needed. [/quote]

+1. [b]I've always heard that you can pay off a 30-year in 15 by just paying extra on the mortgage every month[/b] and thereby save the costs of refinancing.  You'd also have the flexibility of the lower payment if you ever needed it.  It doesn't fix the PMI problem, but I do think there may be ways to get out off PMI once you get to a certain level of equity in the house.  I wouldn't refi to the 15-year because of the risk that something goes wrong later and my income goes down.[/quote]

Well, you have to pay a lot more extra to pay off a 30-year in 15 than you would pay if you just got a 15-year with a much lower interest rate.

that's the key here.  The rate for the 15-year is over a full percentage point lower than their current rate and would mean the PMI would drop off.  That's a pretty big difference.  But it comes with locking yourself in to a higher payment.

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