Refi - 20 year or 30 year?

[Jack Taylor]

I'm in the process of refinancing my place. I have had refinanced once to get a lower rate, but I want to refi again now to get out of my PMI.

My issue is that I've been in the place for 12 years now, and I feel like if I do a 30-year loan, It's almost like I will end up with a 42 year loan (in theory, it actually is). That makes me feel like I've gotten nowhere with all of these payments--stretching out the loan further. I would, however, like some extra cash in my pocket with the lower payment, as opposed to a 20-year refi.

Can someone help clear this up for me?

[Bill F.]

@Jack Taylor It depends on your goals, but it seems like you want to have your cake and eat it too. Are you taking advantage of an increase in the value of your home to do away with PMI?

This may seem obvious, but you can pay down a 30 year loan in 20 years, but you can't pay a 20 yr loan in 30 years!

If you want the cash in your pocket when you need it and have the discipline to make voluntary pre payments, go with the 30 year. If you know yourself and need the forcing function, pick the 20 year.

I've heard of some products that allow to keep the same loan duration while adjusting your rate and the amortization schedule.