refinancing delima, need your advice

[neil]

Initially my wife and I decided to refinance our mortgage with 3.0% 7 year arm. Our plan is pay off the mortgage as soon as possible in 7 years. That means we need to pay a lot of extra money every month.

But the whole economy is still bad. We are afraid of losing jobs. If in the next 7 years, either one of us loses job, we may have hard time to pay the mortgage and feed the family.

My plan is get 30 year refinance, pay the mortgage, save the extra money and invest in HBPP. So it will create buffer zone. If we lose jobs, we have money for every month expense. If everything is fine, then our 6-8% return beat 4% interest in our mortgage.

Do you think it's reasonable?

[stone]

In the USA do you have offset current account mortgages available? We had one of those in the UK and similarly had very uncertain job situations. It was just a pit of debt that your wages go into and your current account spending comes out of. So long as you keep above the 30year payoff timeline they don't mind.  We paid it up to no net debt and so stopped paying interest.  You then have a safety net that doesn't depend on the PP or whatever  beating the mortgage rate rather than evaporating. Personally I'm one for paying off my debts as quickly as I can and that seemed a flexible way to do it. For me any tax advantages or whatever of a mortgage are well worth forgoing if it means you aren't at risk of having your house reposessed.

[Coffee]

Initially my wife and I decided to refinance our mortgage with 3.0% 7 year arm. Our plan is pay off the mortgage as soon as possible in 7 years. That means we need to pay a lot of extra money every month.

But the whole economy is still bad. We are afraid of losing jobs. If in the next 7 years, either one of us loses job, we may have hard time to pay the mortgage and feed the family.

My plan is get 30 year refinance, pay the mortgage, save the extra money and invest in HBPP. So it will create buffer zone. If we lose jobs, we have money for every month expense. If everything is fine, then our 6-8% return beat 4% interest in our mortgage.

Do you think it's reasonable?

My opinion is: Get the 30 year mortgage with the best rate you can get.  If you decide to pay it off in 7 years, great.  If you lose your job... then just pay the minimum until you pick up some new work.

I paid off my mortgage last year.  I only held the mortgage for two years, as it turns out... but at the time-- I wasn't sure if my present income would hold up.  Sure, I paid a little more than I could have... but the peace of mind was worth it.