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What would you do?

July 13th, 2012 at 08:25 pm

DH and I have decided to refinance. We are currently at 4.8% and going down to 3.5% (and to a 15-yay!) with no out of pocket cost, except for a possible appraisal. Since we refinanced about 3 years ago, our mortgage broker said we might get away with an online appraisal for $75 vs $400 for an actual one. We considered going down even further to about 2.8% but that would cost approx $1800 plus the appraisal. Going to 3.5 will save approx $55 a month....going to 2.8 would save about $75. Since we are planning on selling in (hopefully) about 5 years, we think just going with the 3.5 is the best thing. Not sure we could recoup what we would have to pay by buying down points.

Anyway, we are now trying to decide what to do with the "extra" money we are saving.....throw it towards the mortgage? Or up the 401K's? Our mortgage is approximately $127,000

What would you do?

On a side note, if we went down to a 3.5 and a new 30 year mortgage, our payment would be cut almost in half of what it is now....lol. We decided NOT to do that mainly because it could be too tempting to have all that extra money hanging around every month. Sure, we could SAY we would use it wisely by paying down the house or upping the 401K's but it could get real comfortable having that extra cushion around.

Also, we will not throw it at the car loans....my car is now down to $4000 with no interest. DH's care is now down to $9100 with a very low rate (plus we pay extra on the loan every month anyway) and once mine is paid off, we will up his payment even further.

Thanks for your advice and opinions! Smile

5 Responses to “What would you do?”

  1. creditcardfree Says:

    If you are selling in 5 years, you will not recoup the $1800, only saving $20 per month. At that rate it would take you 90 months.

    That's how I look at it anyway. Good luck deciding what to do with the extra!

  2. patientsaver Says:

    When I can't decide how to allocate extra money (what a delightful situation) I split it, half to 401k and half to mortgage.

    I assume you still have a robust emergency account that would cover a year's worth of expenses?

  3. patientsaver Says:

    ...and no credit card debt?

  4. PNW Mom Says:

    @Patient Saver....yes that is correct, no credit card debt and a good emergency fund!

    @cc free...yes, that is why we decided NOT to buy down....didn't think we could recoup Smile

  5. Jerry Says:

    Sounds to me like you are in a great situation, and the cash will lead to some decisions that only you can make. The fact that you have no CC debt and a good EF offers you even more insurance in that regard. Although, hey, even a good EF can always take a little padding, right? Wink Jerry

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