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I thought 15-year refis were always the better deal until my buddy broke it down
Been doing refis for about 6 years now and always pushed the 15-year term to clients because it saves so much in interest. Then my old college buddy Mike, who manages a credit union in Phoenix, grabbed coffee with me last Tuesday. He showed me a spreadsheet of 3 clients who took the 30-year refi instead and invested the difference in index funds. Over 8 years those guys came out ahead by nearly $14,000 even with the higher rate on the 30-year. I felt pretty dumb sitting there because I never once ran the numbers past just the loan term. Mike just laughed and said cash flow flexibility matters more than total interest paid for most people. Now I'm wondering how many other basic assumptions I have that are totally wrong. Anyone else had a moment where someone made you question everything you thought you knew about refis?
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william_craig73mo ago
@ivan462 saw a similar post on r/personalfinance last week and it made me wonder too - did Mike's spreadsheet account for the tax difference on the capital gains from the index funds vs the mortgage interest deduction?
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