Actually the two scenarios aren't the ones to compare, because if you keep the existing mortgage (~$1000/mo payment) and add $500, you'll be paying $1500/month. If you refi, your payment will drop to $886/mo, and adding $500 to that gets you just under $1400/mo. To equalize out these two scenarios, I'd instead compare paying $1500/mo on both options, since you can presumably afford that. So it would be $500/mo extra on the existing or $613/mo extra on the refi. Running an amortization on both, you'd pay off the loan about 5 1/2 months faster with the refi, saving around $8000 in interest. Given that it'll cost you $2500 to do this, you end up winning if you refi. Have you looked into getting a HELOC instead, assuming this is a low percentage of your home's value? Closing costs are lower on a LOC, and if you are going to be paying it off in 4-5 years, there's minimal interest rate risk. How do the rates on a 5/1 ARM compare? That would be something else to consider, since you'd have it paid off by the time the rate resets.

I agree with you Tricia on running credit reports. I won't allow it unless absolutely necessary. I have to pull credit reports on potential tenants and will not pay the extra $2 to pull their scores because I don't believe in them. Here's an ironic thing...people worry about identity theft and so subscribe to a service to check their credit report once per month. All the checks show up and the score goes down. Here's another...get a credit card with a limit of $10,000 and have $7,000 in debt on it. Another person has a $4,000 limit with $3,000 debt on it. The first person, even though they are more in debt, will get a higher score because they have only used 70% of their limit while the 2nd person has used 75% of their limit. There are too many screwy things that go into the credit score to make me believe in them. Of course all insitutions use them because they are supposedly very objective, so we in society are stuck with them. I know of a friend who last year had perfect credit and a score of 750. She financed a new car at a good rate. 3 months later she was filing for bankruptcy. She had been paying her debt but just squeaking by. It all caught up with her. But, she had a good credit score:-))

Hi Landmarker, You described exactly what I said. It is a hedge, with fees going to the insurance co. taken off the upside. No, that is not what I said. You leave "the upside" as an ambiguous statement, while I am explaining the factual detail. The costs to manage the funds are *NOT* taken from the CLIENT'S gains, which are based on a fixed calculation tied to the performance of the index. Rather, the costs are paid from the company's own internal performance. The client is *NOT* exposed to the risks of direct investment in the securities (in this particular type of product.) There are 2 key points... 1. It costs money to peform this hedge It does NOT directly cost the client's money*, it is paid by the company's money. (*Given that the client keeps their time commitment to allow the company sufficient time to work the funds to earn enough internal returns, on average. The time commitment is *NOT* relative to performance, but a pre-specified concrete amount of time (typically from 3-10 years, contracted in advance.) 2. This hedge cannot come with a guarantee > the cost of borrowing. Currently individuals can take out 30 FRM loans at 4.5% or lower, and put that money to work at a guaranteed 7.2% growth rate for a 10 year term, and if done inside a ROTH IRA it grows tax free, and can be accessed to spend tax free. You *ARE* correct that no specific provider guarantees that the market will provide this opportunity... *HOWEVER*, the market is doing so right now on a very safe basis, at much lower costs than direct securities investments (of *ANY* level of sophistication.) There will be many days the hedge out peforms the S&P and there will be many days the S&P outpeforms the hedge. That depends on the time frame you look at. Your statement is correct in a blind one-annual basis. Taken at a string of consecutive years, the S&P has historically *NEVER EVER* outperformed the hedge on a 3-consecutive-year basis or longer. For those willint to take the short-term risks for the possibility of the short-term home runs... there is the lottery... or there is direct market investing. Either is attractive to some people. Neither is the long-term best choice. There will be no days the fees for investing in the S&P exceeeds the fees for investing in the hedge. That would be *every* day, if you are referring to the fixed-index annuities. So the question an investor needs to ask is do they get a benefit from the annuity (worth the cost?)... For many the answer is yes. For many more the answer will be no. That's why S&P 500 index is a more popular investtment than annuties. No, that's not why at all. It *IS* true that direct index investment is more popular, but the overwhelming reason is that the industry that promotes it makes *MUCH* more money by doing so, *AND* leaves the burden of downside risk on the shoulders of the clients. This creates a MASSIVE incentive for allegiance and promotion of the concept, and a MASSIVE incentive to keep client's money *AWAY* from the safer annuities with the same (and better) performance. Allowing funds into the annuities kills the golden goose of management fees for securities. It really is tantamount to the promotions of the lottery, and the securities world knows it quite well. Humans (a very unfortunately large number, anyway,) LOVE the thrill of the gamble, and the meme of "you gotta be in the game in order to win the home runs" keeps people in... to be fleeced over and over and over again. Its tragic that people only stop & think about it (if/when they think about it deeply at all) when the markets drop and they discover that THEY are the ones holding the bag all the way down, despite having paid 1-3% of their total funds in securities fees to the stock brokerage companies and their salesmen for years and years. One size definitely does not fit all... but unprotected and ungauranteed securities investment is playing with a very volatile fire... it burns even the sophisticated traders, and decimates the unsophisticated public. Cheers Dave Donhoff Leverage Planner

^As the buyer, you get to choose your lender and the seller has no say. Having said that, if the lender has a bad reputation in the area, the seller is not obligated to accept your offer. Naturally, since you can pay cash, you can overcome this aspect. A pre-qualification without documentation to the lender is worthless. By documentation I mean whatever the lender needs to issue your loan (bank statements, W-2's, tax returns etc). Once you have provided all the documentation it really is a pre-approval. [If the buyer is risky they are better off going through the underwriting process right up front before looking for homes that way it is only subject to the property and appraisal.] Naturally you aren't in that boat at all worthy. The lender is obligated to provide to you a Loan Estimate that details the fees within 3 days of your loan application. This is typically done after you have a contract but right in the beginning of your loan processing. Ask the lender for a detailed loan worksheet prior to your offer so you can see the itemized expenses. Here is the loan estimate form and its constraints https://www.consumerfinance.gov/owning-a-home/loan-estimate/  Check various lenders. I have found the big box banks to be the worst now for originating mortgages except if you are getting a jumbo loan. The best sources are non-bank mortgage lenders - all they do is mortgage origination and funding all day long. IME they have the lowest rates and fees and perform quickly (30 day closing is normal, can close more quickly).