Is anyone here-

[Nephythys]

I will get no money in hand by doing this.

I am not doing debt consolidation with it.
It is not an ARM- will not adjust.

Thanks for all the input though- I am learning as I go. I do appreciate it.

[Ghoulish Delight]

Originally Posted by Nephythys

I will get no money in hand by doing this.

By "money in hand" I meant the $150/month difference in payments.

[Alex]

Assuming you pay only interest on an interest only loan, this is very bad unless you already have a fair amount of equity in your home (which, I'm guessing, you don't). If you have to sell your house any time in the next few years, you'll likely find yourself underwater on it and barely able to get enough out of the sale to pay off the mortgage or not being able to do even that. Yes, if your market continues to appreciate you can come out ahead but there is no guarantee, particularly in the short term, and any emergency need to get out from under the mortage (loss of employement, etc.) will have you selling cheaper than you might have otherwise done.

If you take an interest only loan and are faithful about making additional principal payments, it may work out (having the option in an unexpectedly lean month to pay very little). However, if you're feeling a pinch that the $150 monthly savings is very attractive to you, then you probably aren't in a position to pay much principal each month anyway and you're still in the first boat. Especially if you're using the HELOC on the 2nd to continuously draw out what you're paying in.

You downplay at $300 (almost 30%) jump in payment (just from the 30-year fixed; when and how much will the 2nd be reamortized) after 10 years but keep in mind that you are chasing now a $150 reduction in payment. It could be that in 10 years that will be an insignificant change but it could be that it will be a blow as big as it would be today.

There's a reason interest only is generally a subprime type of lending. Because people with great credit and plenty of money don't want it. If interest only made much sense, then the rich people would be doing it.

If the reason you were initially considering it was debt consolidation and that isn't going to be a result of this refinance I would back off for a little while and give it a lot of thought. And try talk to other experts than just the woman trying to sell you on a loan. And be very honest with yourself about whether you'll faithfully pay principal. Do not include in the benefits column anything you aren't completely certain you do.