Budget Review...can I afford to refinance?

[littlemisssunshine]

Since some people were lamenting about the lack of budgets I'm posting mine. Although I am mostly boring and conservative. I am wanting to refinance my 30 yr mortgage at 4.375 to a 15 year at 2.75. We've been married for 3 years, bought our first home a year ago and do not have children, nor are planning on them for another 8 years or so. We're 24 and 26. We are debt free except our house.

Edit: We have 25k in liquid savings, 55k in stocks and H's 401k(not sure the amount)

H's Monthly Income after taxes (we break even every year) insurance (med, dental and eye=$250) and 13% 401k contributions) $3000

My Income: I just started a property management company, and I have 8 clients. I have several more properties coming up with in several months and expect to be up to $1500/monthly by Sept.
$750-contract data entry work
$1100-Property Management

Total Income: $4850

Expenses:

Mortgage: $1137 (includes taxes, insurance and an extra $100 towards principle)
Groceries: $400 (includes all household items)
Water: $75
Electric: $250
Gas: $250 (includes oil changes)
Cell Phone: $110 (unlimited text, talk and web for 2 ppl)
Verizon: $114 (cable, internet and phone)
Sprint: $34 (tablet internet, will be ending in Dec)
Eating out: $100
Entertainment: $0 (we have $300 in movie gcs, and do free things)
Car Insurance: $110
Tithe: $500
Pest Control: $26
Fun Money: $100
Misc: $100 (haircuts, gifts, etc)
Total: $3306

Business Expenses:
Office Rent: $200
Association fees: $125 monthly
Fax: $10
Website/software: $14.95
Total: $349.95

Total Expenses: $3655.95
Savings: $1194.05 (we split it between a savings account for short term goals, ie vacations, house projects, etc) and a more long term mutual fund. We also take H's extra paychecks and put them straight into savings, plus he has a general profit sharing. Between the two we put another 9k straight into savings every year.

How do you think we're doing? Should be doing anything differently? If we refinance our mortgage will go up to $1436 (includes escrow), so we'd be paying $300 more than we are right now. The refinance will save us 95k in interest. Closing closing costs are $2000, and would be rolled into the loan. Would you refinance?

Also, how reputable are some online banks that are offering refinancing? They have good rates but I've never heard of them before. Is there some way to make sure they are ok?

[Deleted]

Is the mortgage under both of your names? I ask because it may be hard to refinance if you have just left your job and started your business. They may require 6 months proof of income or up to 2 years for self-employed people. You probably won't be able to qualify based on your H's income only. If you can qualify and feel comfortable with your budget, I would totally do it. Your budget looks good, but not a lot of fat. You should also consider contributing to a Roth IRA for your retirement.

[littlemisssunshine]

Between my contract work (7 years) and my H's work (5 years) we'd qualify. I know I need to contribute to a Roth, that's my plan as soon as I get my business going. Target is next Jan.

[SJ]

Is that the current mortgage amount or the proposed new mortgage payment? How much will your payment rise with the refinance?

I would split up that savings amount and start Roth IRA accounts (and/or a SEP IRA for you if you are considered self-employed). How much do you have in savings now?

[SJ]

Ok I missed the information at the bottom of the post. If you are planning to stay in this home for quite some time, I would be ok with the new mortgage payment.

[Roc A Bee]

I would be ok with the increased payment, but I don't see any retirement savings for you. I would remedy that first. I'm not self employed, but why are your business expenses built into your personal budget? That seems messy.

[littlemisssunshine]

Jul 9, 2012 18:15:29 GMT -5 @vicmo said:

Jul 9, 2012 18:03:34 GMT -5 Roc A Bee said:

Ould be ok with the increased payment, but I don't see any retirement savings for you. I would remedy that first. I'm self employed, but why are your business expenses built into your personal budget? That seems messy.

Agreed. I'd go so far as to set up a separate bank account for the property business, and pay yourself a salary from the rents so that things are kept entirely separate.

Do you own the properties you are managing? Are you likely to have large expenses (like repairs) that you should be saving for? (And if so, you should make these savings from profits from the business, and still keep them separate from your personal funds.)

I don't own the properties, I just strictly manage them for clients. I do have a business account and will be taking expenses out of there and paying myself a salary. I have so little profit at this point I didn't deem it necessary, but will make the swap in several months.

We have 25k in liquid savings account and 55k in stocks, plus H's 401k.

[Roc A Bee]

With the update, I would put $420 into a Roth for you and do the refinance, but I would pay the closing costs out of your efund.