Refinance what to do
We are trying to decide if we should refi and if so what option to choose. In 03 we refi. our 30yr. to a 15 yr. @4.5% and currently owe $145k. Since then, our family has grown by 4 kids. We have not been immune to the raising costs of everything-real estate taxes have gone from around 4500 to 8000; insurance has double, med. premiums up, you know the list goes on and on. Just like everyone else, salaries have not kept up with these rises and bonuses are pretty much gone as well. I know sob, sob. To the point, we are now finding ourselves getting closer and closer to not making ends meet despite living modestly. I am beginning to fear that when the time comes to need to do home repairs (our home is 10 years old) we will not be able to afford it. That coupled with our kids getting older, means their costs rise (our grocery bill will not be low when we have 3 teenage boys in a few years). It is likely that when our youngest goes to school in a few years I can work part time. I just don't think we should count on part time income-and I would have to have summers off b/c child care would negate any earnings.
So, what to do, refi, to a 15 or 20 year? The unfortunate thing is that we are really at a sweet spot with our current mortgage-paying a lot more principle than interest. However, with a 20 year, our payment could be reduced by almost 1000 a month. If we take conservative approach, and save 500 of that (yes, we can be that disciplined) a month, we could more than make up for the additional interest. Am I right in this assumption-I was figuring a return of 6%.
I just feel that if we wait and see if we do really start have a situation where more goes out than in, that we will lost out on these super low rates and if we start to sink when inflation hits we will be screwed.
For what it is worth, we max out 401k, and ira. Sadly we contribute little to 529s, partly b/c we have (had)hopes of our mortgage being gone by then-not so sure now. My husband will flat out refuse to not fully fund his 401k and IRA.
Well, thank you for reading this jumbled saga and if you have any thoughts that would be great.