Refinance to a 15 or 20 year mortgage

Lovey

LoanSafe Member
Sep 8, 2012
35
0
6
Our mortgage originated in 2011. It is a 30 year @ 5.125%.
Payoff is 2041 but since we pay biweekly, it's expected to be paid off in 2035. We always pay biweekly as it is easier for budgeting purposes.
We would like to refinance. Closing costs will be rolled into the loan. This is what we have on the table:

Option 1:
20 year @ 3.25, payment lowered by $331. Original pay off is 2040 but paying biweekly will pay off loan in 17 years (2037) instead.
Interest savings of $40,000 (based on biweekly payments).
Pro - lower payment by $331
Pro - earmark savings for extra mortgage payments, replacement cat, college, etc.
Pro - interest savings
Con - extend mortgage 2 years longer than current track we are on even though we pay less overall

Option 2:
15 year @ 2.75, payment increases only $50. Original pay off is 2035 but paying biweekly will pay off loan in 13 years (2033) instead.
Interest savings of $70,000 (based on biweekly payments).
Pro - payoff sooner (2 years sooner than current track)
Pro - interest savings
Con - payment increase by $50

Which would be the best option?