Should I refinance my fixed 15 year 5% mortgage for a fixed 30 year 5.75% mortgage to free up cash flow?
I am thinking of refinancing so I can free up monthly cash flow to invest.
I have been looking at a refi from www.madrate.com and they offer a $289 fee (includes credit, doc prep, processing, underwriting, tax service & flood certification fees)
I have been reading various advisor recommendations to have a 30 year mortgage rather than a 10 or 15 so to free up investment cash flow. (www.ricedelman.com) Rates are still pretty low right now and are very attractive.
I know that when I pay mortgage interest, it is paid from my after tax income. It is also tax deductible at the end of the year.
I also know that when I earn interest in the stock market, this is pretax interest. If I earn 8% in stocks, my effective rate earned will be lower since I need to pay taxes on it at the end of the year as well.
I need some feedback if you think this would be a good idea or should I stay where I am at?
DUNCAN