<p>As an alternative to others who might be thinking about this issue while reading this thread – </p>
<p>We refinanced to a 15 year fixed six years ago @ 5.28%. The payment was about $100/mo. more than our 30-year loan payment. Mortgage is ~25% of current market value (which accounts for the housing decline in this area). We bought low and assumed one salary rather than two (I was working FT at the time). The mortgage will pay off four years after S2 graduates from college. We will get some FA during the two years both kids are in college, and during that time we expect to tap into our HELOC for the part we can’t do from current income and the kids’ Staffords/work/scholarships.</p>
<p>We’re already at the point in the loan where we are paying more than 50% to principal (yippee!), and by the time S2 graduates, the first mortgage will be fairly small. At that point, we’ll figure out whether it makes sense to consolidate the first and second into a 10-year primary mortgage, or to keep the two separate (esp. if the HELOC loan rate is lower).</p>
<p>We are not comfortable with having all our cash tied up in the house at this stage of our lives (not that we could pay off the mortgage at this stage, anyway), and given my medical issues, extended unpaid medical leave and my continued limited ability to work, the 15 year was a good way to make progress on the mortgage without leaving us too exposed if my income disappears again. We haven’t spent our home equity on renovations or lifestyle choices, so it’s there for tuition or medical expenses if need be. All these years of living frugally have paid off when medical disaster struck. </p>
<p>I will now put on my pension hat and say SAVE FOR RETIREMENT. There is no guarantee anyone’s kids will be able to support their own families plus parents/in-laws down the road.</p>
<p>POIH: MIT will expect you to tap into home equity if you don’t have a job (and you’ll have to make payments on that, too). Gotta figure that into your cash flow in a worst-case scenario.</p>