15yr or 30 yr?? But big delta in interest rates...

[Alexander Cabrera]

Hello.

I've got a primary home 30yr loan at 3.95% of which $253k is left. $1272 PI, plus a 15yr HEL at $57k. $511 PI. Home is worth $420k so plenty of equity to refinance if we choose to.

I have the opportunity for a promo interest rate at 2.99% for 15yr plus with 1% org. fee. Total closing costs including prepaids/etc are heavy at $10+K and when built into the loan, I am given a scenario of $321k at 2.99 with a PI of $2215. I see the large interest savings of paying this loan off in 15yrs as apposed to the remaining interest if my HEL and primary are paid in 15 and 30yrs, respectively. And we often paid an extra $500 for the HEL so in effect we are doing the same thing of paying roughly $2300 a month but chipping away a lot less.

This primary home could be kept as a rental, should we move into a larger home for our increasing family. Maybe that happens in 2-5yrs. Or we sell. I know it pays to stay with 30yrs re/rental strategies and leverage...etc. However in Oregon we are federally capped on interest rate deductions along with state and local taxes so it's mostly a standard deduction for us, hence the higher interest 30yr doesn't help compared to 15yr from a fed tax standpoint.  Our debt to income ratio is low with about $3400 in mortgages (above plus a duplex 30yr at $1175 PI and a Car loan at $400) where gross monthly W2 income is $1550-1950 (depends on Profit sharing as part of my total compensation). Even adding other minor monthly 'debt' like cell phone bill, utilities, etc, it doesn't move the needle much.

Most scenarios that tout 30yr over 15yr use a very similar interest rate in comparison, however we're talking almost a complete point difference.  And those that talk about putting the extra $$ from a lower 30yr mortgage into the stock market for 'great gains', makes we wonder as we are likely going to hit a period (short? long?) of volatile and mediocre stock returns -yes speculation....

Finally I doubt we will go past a max of 2 USA rental properties and one primary home. 

Anyone have some advice? Can crunch some numbers on real savings differences/opportunity cost loss?

Thanks!