Hellobee Boards

Well, not sure you want to listen to my advice, but I say refinance! You'll save sooooooo much money in the long run (assuming you have the same interest rate or smaller with the refinance), AND you'll still have extra money each month!

I'm pretty sure we're breaking even or going negative each month. But we have lots of savings to cover it and our projections put us back in the positive in a couple years, so we're not concerned (yet)!

We refinanced to a 15 year mortgage, and although some months are a little stressful for me, I think it’s totally worth it and I’ve never regretted doing it. Just remember too to keep property taxes in mind as well – ours went up almost $600 last year (unexpectedly), which isn’t that much each month, but should that keep happening, it is something to take into consideration on top of the higher monthly mortgage payment.

We are in a similar situation where our student loans will be paid off completely within 5 years, and we contribute healthy amounts to 401(k) and 529, which could be reduced if need be. I sort of think of the refi like I do daycare: it’s a lot for a while, but then it will be easier. I wouldn’t do it if it means you can’t contribute to savings or something like that, but if you can do it and have some known breaks in your budget coming up (like the ending of student loans), then it’s probably worth it.

Other things I would take into consideration: would you get a better interest rate switching to 15 years? (You should). Are you likely to need to replace cars or other things that might bring a new monthly payment into your life?

Our positive cash-flow is right around $1000/month, which we then split between investment/savings accounts and paying extra on our mortgage. DH maxes his 401K, and his company allows you to change that at any time - so if an emergency came up, we'd be able to have an extra $1500/mo immediately (which is great for peace of mind!)

As long as your budget pretty accurately reflects your expenses, I'd definitely refi. The amount you're putting toward student loans/cc debt will switch over to positive cash-flow soon too.

It sounds like you are in a really good position to refinance and benefit from that in the long run. We have a decent positive cashflow, but it's earmarked for daycare expenses once our second LO arrives next year and savings towards a downpayment for a bigger house (we are definitely not in a forever home, unfortunately). If I were in your position, I'd probably refinance!

@Mrs D: If you reduce your 401k contribution, just remember to factor the tax you're going to have to pay upfront on that income.

FWIW, I would feel comfortable on the cashflow for the 15-yr. if you run into trouble you have plenty of wiggle room on the 401k, or short-term borrowing. Why save less, or pay higher taxes, or pay more interest unless you absolutely have to.