Stay w/ a 15 yr @ 2.75%, or go to a 30 yr and take the cash?

[Jonathan Watson]

Just looking for a little advice/insight into how best to approach my mortgage.

Current Situation...

I have 15yr fixed on my primary res. with 14 yrs left.  I owe about $225k on it still (home is worth about $485k). Interest rate is 2.75%.  Payment (not taxes/ins) is $1640 (paying $1100 of principal every month).

I also have a HELOC (currently at 4.75%) for $125k (remaining balance of $45k was used to purchase 2 out-of-state investment properties, cash-flowing about $400/mo after mortgage, insurance, taxes, HELOC payment).

Should I...?

Refinance into a 30 yr fixed, with a monthly payment of about $1050.  I would pay down the principal about $350/mo.  I would gain an additional $600 of cash every month which I'd like to use to store up for future investments

Should I refinance and take the $600 additional monthly liquidity for future investments and thus lose the amazing 2.75% interest rate...?

What would you do?

[Allen Fletcher]

@Jonathan Watson

It really depends on your future plans. Do you plan on spending the rest of your life in your current home? If so, keep the 15yr and pay the minimums putting all the rest of your cash in other places. Use the HELOC to pull equity out (remembering to give yourself a margin so that even if your investments do not work out you do not lose your home) and invest. If you are probably going to move refinance to a 30 yr and use the monthly savings. There is no right answer, there is only the answer that best fits your situation.

Just make sure that whatever you decide you leave yourself as many exit strategies and margins as you can in case the worst happens. It would be a tragedy to have the markets cool, housing crash, etc. destroy your financial life because you stretched too much.

Respectfully,

Allen Fletcher