Refinancing 30yr fixed

[aasu]

Little background
I have an 80(6.75%)/20(8.25%) mortgage that is 4 years old. I've been paying an extra hundred on both mortgages since the first payment. These total roughly $1250/month.

I just talked to the loan company and they will refinance into a single loan at the following rates: (these include escrow and closing costs)
30yr(5.25%), payments ~$800/month
15yr(5.50%), payments ~$1100/month

I'm leaning toward the 15 yr loan. Is there anything I'm missing that might make me choose the 30yr over the 15yr? The only thing I can think of is the closing costs. Do they include all the closing costs or just the costs associated with the loan company? Leaving open the additional third party closing costs.

thanks

[Speedwrench]

go for the shorter loan, over the life of the loan you will save thousands of $$. i am assuming you are planning on staying there for a while. also all money paid down on principle is money in your pocket when it comes time to sell.

life begins when the kids leave home and the dog dies.

[the_tow_guy]

One of the smartest things I ever did was refi to a 15 year fixed about 5 years ago when the mortgage rates bottomed out (4.85%). As 'wrench says, the $$$ you save over the life of the loan is huge.

[mitch17]

If the rate on the 30 year is lower, go with that but make the payments equal to the fifteen year loan.

[HotinOKC]

Don't they penalize you for that mitch?

[rayboy55]

In my experiences, the 15 year rate was always lower than the 30 year rate. I'm not sure why this one is higher. Make sure that whichever one that you decide doesn't have a prepayment penalty.

[aasu]

Now there's a + for the 30yr

I'll check to see if things have changed but if I pay with direct withdrawal (ACH) my present mortgage company doesn't have a problem with monthly principal-only payments.

Running the numbers through an online calc it shows the 15 yr costing more if I follow Mitch's advise.

[djcheez]

its a very unique market and seeing 30 year interest rates lower than a 15 is not unheard of. WIth the recent, quick rate drop, investors just havent dropped their rates on the shorter terms. Adjustable loans used to be much lower in rates than fixed but that isnt the case anymore. Most loans these days dont have a prepayment penalty but it is still good to ask. take the 30 year if you are disciplined enough to make a 15 year term payment. if not, take the 15

there are only 4 variables to a loan. rate, payment, term, and loan amount. just because a loan says 30 year doesnt mean you cant pay it off in 20, 15, 5 or 1 year. Given the same rate, loan amount, and term, the payment will be identical. So, whichever program has the lower rate will save you the most if you make the same payment.