Take my case for instance. When I bought my condo 5 years ago, I paid $290K for it, and at the peak of the market, its value approached $475K, but right now, it’s value is only appraising at about $250K. This sucks, because in order to refinance, I can only borrow 80% of my homes equity, or $200K if my home appraised at $250K exactly. The banks don’t take into consideration that I’ve been on time with ever mortgage payment over the last 5 years, and that I’ve even made extra principal payments in some of those years in order to accelerate my mortgage.

If you have enough equity in your house, now is the time to refinance, but if your home value has dropped, as most homes in the Southern California area have over the past year, you just may find yourself in a situation similar to mine – having your home refinance denied. It’s a very unfortunate situation when someone like myself who takes pride in having great credit has a refinance declined because of the current state of the market.

I’m currently looking at a couple other options that will help me get refinanced, and I’ll keep you all posted if I find a way to lower my interest rate.

Let’s just briefly compare a 30 year mortgage to a 50 year mortgage for a $250,000 home loan. On a 30 year loan, you’d be looking at a monthly payment of about $1498.00, and over the life of the loan, you’ll be paying $289,595.00 in interest – so even with a 30 year loan, you’ll be paying more interest than the original amount borrowed, but now lets look at the 50 year mortgage loan. With a 50 year mortgage, borrowing the same amount, your montly payment will only decrease about $200 per month (not even actually) to $1,316.00, and the total amount of interest paid will skyrocket to $539,607.00. The amount of interest that you pay on a 50 year loan will nearly double!!!

Now lets think about this for a bit. Will saving $180.00 per month on your mortgage payment be worth adding 20 years to your mortgage, and also adding an additional $250,000+ to the amount of interest that you pay over the life of your loan? Let’s figure that you invested that extra $180 every month into a savings account or CD. Let’s figure for arguments sake, that you find a savings account or money market account that will yield 5% and that you invest the extra $180 every month and let the interest compound. At the end of 50 years (the entire length of your mortgage) you’ll have $480,357.00. This will essentially offset the interest that you pay on the 50 year mortgage, making the total amount of mortgage paid equal to about $60,000. Looking at it this way makes the 50 year mortgage look more appealing because it frees up more monthly money to use as an investment, however here are the only problems that I see with this:

1. Most people probably only consider a 50 year mortgage because of the fact that they’re looking for a way to lower their monthly payment. That being said, most people who elect to go with a 50 year mortgage aren’t going to be able to put the extra $180 (from our example) into a savings account in each month for the 50 year term.
2. Life happens, even if a person has an extra $180 to put into their mortgage each month, there are often times going to be months where no money gets put in, whether it be due to:
   1. Holiday expenses
   2. Unexpected auto expenses
   3. Traveling and vacations
   4. Purchase of new vehicles

In my opinion, a 50 year mortgage is a terrible idea, but if you’re planning on staying in your home for the rest of your life, if you are discipllined enough to invest monthly and not withdraw, you could actually make the 50 year mortgage more favorable.

Firstly, my wife and I decided to have custom closets installed in our master bedroom, and in doing so, I had to bypass an additional principal payment. This is a decision that we are still happy with because not only were we in need of some organization in our master bedroom closet, but it also will help to increase the value of our home when it comes time to sell.

Secondly, with the declining market, we do not have the same amount of extra cash lying around that we can use to make an additional principal payment. Over the past 3 months, my portfolio value has decreased by half. Thankfully, I’m only 30 years old, so I haven’t pulled any money out of the stock market, and in fact, I’ve recently started to put more money into the stock market, and will probably continue to do this as long as the Dow Jones remains below 10,000 points. If Warren Buffet is doing it, it can’t be a bad idea, right?

With the market the way it is now, I am left with the following question: Should I now put more money into the stock market, or should I return to making additional principal payments? This is a tough question, because the market still seems to be very volatile, even though this past week was mostly in the green, but making additional principal payments guarantees me savings on mortgage interest.

For the remainder of this year, I am going to bypass any additional mortgage acceleration payments and leave a majority of my extra money in high yield savings and money market accounts. If I see a good opportunity in the stock market, I may invest in some high dividend yielding stocks, but for the most part, I am just going to sit on as much cash as I can.

Last night I imported all of my accounts and clicked around a little bit, so I really don’t have too much to share in terms of all the functionality, but just from the little bit of clicking that I did, I can tell you that Mint offers tons of functionality, so stay tuned for updates on my favorite features and functionality of Mint.

My one problem with Mint is that it doesn’t seem to support Firefox very well – At least not the Firefox 3 Beta.