Refinance question (somewhat academic)

[Matt Pieper]

Hi All,

Going thru a refi right now on a SFR property and wanted to hear your thoughts.

The basic numbers: 123k balance with 16 years remaining.  Current rate is 5.49 

Im talking with Quicken Loans about doing a refi, and was presented with the following offers:

15 year mortgages- 3.5% with $4900 closing costs or 3.99 w/ $3200 CC

30 year mortgages- 4.375 w $3350 CC or 3.99 w 4,820 CC

Here are my questions.  The closing costs (I feel) are high on all of their products Im being offered.  They don't have anything where they are willing to roll the closing costs into the rate (they will only roll them into the principal). So, they make the math a bit more complicated for me.  

Obviously the rates on all of these are better than the 5.49 Im currently at.  But, assuming I go thru with a refi, would I be better off at a higher monthly cashflow and extending the loan another 30 years... or would it be best to go with a 15 year to take advantage of a lower rate and paying off the rental earlier?  

As far as I can tell, the benefits with the 30 year are:
Interest is deductible
Due to inflation, the cash that Im using to pay the monthly payment in 20 years won't have the same buying power as the monthly payment does today.  
Keep an extra ~$350 per month to reinvest

Does anyone else feel that a refi is like going to a magic show and you're trying to see the magician's sleight of hand?  

Im curious to hear what everyone's thoughts are on this.  

Thanks

[Mark Kelley]

Is this a property local to where you are? If so, you might shop at at a couple local / regional banks to see if they can do better. Could also help you over time to start or continue building bank relationship. 

If I were in your place, I'd go for the 30 year. It gives you options. You can pay down mortgage faster if you want by contributing more to principal, or you can invest, or you have more room if forced to lower rent in a downturn and still hopefully cover PITI.