I'm new to ERE; I live in Salt Lake City, Utah. I've been slowly making changes in my financial life for the last few years from living paycheck to paycheck to paying off debt and building up some savings. Having a son was the catalyst to all this change, and going from two incomes to one, but it is something I've wanted to do for much longer. I've read quite a few books about the subject--Rich Dad, Poor Dad, Your money or your life, etc., but there is a lot about ERE really resonated with me. Maybe it was from being a Peace Corps volunteer in Africa. I've ordered the book and read quite a bit of the blog. Not sure I'm willing to go as extreme as some, but really like the concepts. We only have one car, I bike to work so I'm doing good on transportation and working on getting our groceries down. Not sure what to do about our house.
I'm currently debt free, except for my mortgage, have a good secure job, and 10k in savings which I'm trying to build. I bought in 2006, in the crazyness, a downtown home. Its a good location, close to work, downtown, groceries, and other stores. We like the house and don't plan on selling it. I may move in the next few years for a promotion, but don't think I would sell it, but rather rent until we can make back some of the loss if we can. The rental market is strong here and we would cover the mortgage, taxes, and insurance, but not maintenance, repairs, or time sitting empty.
I'm looking for some guidance or another perspective on the housing situation.
I'm considering refinancing to a 15yr loan at 3.00% through our credit union with about 2200 in fees/points. The house is worth about 160,000 and there is 153,000 left on the note. The current is 30 year @ 5% with 28 years remaining (I did a no cost refi to reduce interest 2 years ago through the lender). I tried using this calculator: http://www.mtgprofessor.com/calculators/Calculator3a.html
But I'm not sure I trust the result. The numbers for break-even make sense, but increasing the rate of interest on my savings will increase the refinance savings over 15 years. Does this make sense? Another factor is I would have to start paying PMI of about 65/mo. The break even is about 13 months.
Anyway, I'm trying to weigh differences between keeping the current loan and investing what I can ~1200/mo, or refinancing to lower the rate, pay off the loan quicker, and having a lower amount of money to invest ~200/month less.
I HATE having to pay the bank and having this debt, but only getting a 2% reduction in interest vs. what I might be able to get a return on investing, seems that mathematically investing more would be better in the long run and is what I am leaning towards.
Anything that I am missing here? Different perspective?