stocklook's Blog : Should I Refinance: Simple Steps to Make a Better Decision

Stocklook's - All three scenerio's are wrong in my book. The best advice I can give you, is to contact "Dave Ramsey" regarding refinancing. Debt-Free is best. Your income is the greatest tool you have for building wealth. Get out of a 30 year mortgage, and into a 15 year. Never live in a home that the mortgage cost more then 25% of your bring home check. Pay your smallest bills first and work the debt snowball. Example three bills Visa 5,000 Homedepot 1,000 and JCPenney 500 - Pay the minimum on the 2 largest and pay off the JCPennies as fast as possible, Then take the amount you were paying for the JCPennies and add that amount to the Homedepot bill 25 min + 100 (JCPennies), After paying that off then attact the Visa adding the (JCPenny+Homedepot) 25+25+100=150 and accelerate the payoff as quick as possible. Regarding your refinancing, what is the difference in saving of the 15yr -vs- 30yr - I'm guessing close to the price you pay in interest for the additional 15 years or double the value of the house you are living in. JUST THINK WITH THE 15YR MORTGAGE, YOU COULD BE DEBT-FREE LIVING IN A LITTLE LESS NOW, BUT LIVING LIKE A KING LATER - PROBABLY HOUSE, COTTAGE, AND THE BOAT. Remember "Live like no one esle today, so you can live like no one else tomarrow quoated by Dave Ramsey. Happy Trading and God bless you.

Stocklooks..a fascinating viewpoint on evaluating cost/savings. Thank-you for posting this. And the same thinking can be applied to all sorts of things. Such as: What if I invest this money instead of using it as a down-payment on a car, and car-shop in a year or so, instead?...What if I put off buying new winter boots (here in Minnesota, an issue each year or so)?...What if I invest money instead of spending it on restaurants? Lots of ways to eliminate some costs in order to grow some money through investments.

Goog points everyone, I love Dave Ramsey!! But there are a few things I disagree with him, one of them is paying of the smallest credit card balance first. He suggests doing this simply to motivate people to start paying off debt. If you start with a large balance you will feel like you are not making any progress. Although in my own experience I will do an analysis on the effective interest rates and then come up with a payment plan, most people don't know how to use the time value of money and thus Dave's illustration is best for the average person, just not everyone.

I do agree to always do a 15 year mortgage if possible, which may mean buying less house but it will payoff in the long run. For your 15 year mortgage it can still be beneficial to refinance and you could save a lot of money refinancing a 15 year fixed rate mortgage; depending on where you are on your amortization tables.

Thanks for the comments!