TSP Center

So come tax time I'm looking to refinance my mortgage down to either a 10 year or a 15 year loan. I'm also considering, since I usually get around $5,000-$6,000 back from my tax return every year; I'm wondering if I should throw that money into my TSP or put it toward my mortgage?

Keep in mind I'm still 19+/- years away from retirement.

Any advice?

What are the advantages of refinancing vs just paying extra each month? Lower interest rates? Will that be offset by any fees associated with the refi? By paying extra each month you could emulate a shorter term mortgage.
Also consider adjusting your withholding to keep more in your takehome pay vs loaning it to Uncle Sam.
But it comes down to what works for you. Some people are more comfortable paying more taxes per period and getting that refund. Sort of like a forced savings account without interest (these days of low interest are killing savings accounts). The same with paying extra on the mortgage. It works for some people, not for others.

IRQVET wrote:So come tax time I'm looking to refinance my mortgage down to either a 10 year or a 15 year loan. I'm also considering, since I usually get around $5,000-$6,000 back from my tax return every year; I'm wondering if I should throw that money into my TSP or put it toward my mortgage?

Keep in mind I'm still 19+/- years away from retirement.

Any advice?

First, be very clear WHY you want to do this (the "objective"). Is it to increase monthly cash flow, or shorten your remaining mortgage payment period? Other reasons?

Once you figure this out, then the answer you seek should become evident.

You should look at adjusting how much tax you are paying to reduce your return to as close to 0 as possible. The IRS has a tax calculator that can help with that calculation. That way you aren't giving an interest free loan to the government and can use this money throughout the year instead. $6k per year is ~$500 per month that could be going into your pocket instead.

Why haven't you paid off your mortgage?

I would only refinance if the cost of doing so was paid back in a relatively short manner. Once all your other debt is paid off, then focus on the mortgage. Of course, you can find out what your principal is and double that amount. Make sure the extra is designated as principal.

You can turn a mortgage into a shorter term just by paying extra principal. No need to refinance.

If you have a 4% mortgage and you can average +10% in your TSP, max TSP before paying off mortgage.
Agree with wsureshoot, just pay extra when you can, something bad happens fall back to paying min.

If you can lower the interest rate and the term of the loan with minimal fees (say a break even in 1 year), do the refi.
If your mortgage is less than say 4% and you can likely get a return of more than 4% on investments...invest the extra money.
It doesn't make sense to pay extra on a 3-4% loan if you can make more investing the extra money.

Main goal is to pay off the house early. I'd pay extra on my mortgage and keep my 30 year mortgage, but I don't have the discipline and I'd find other ways to blow the cash. So between the interest rate reduction, and the fact that I'd be forced to pay a specific amount; that would work better for me.

Been "loosely" doing the Dave Ramsey thing, not all the steps down to the tee. But I'm completely out of debt other than my mortgage, I'm contributing 20% into my TSP, and I have a confortable savings account that could float me for 6 months.

Figured if I pay off the mortgage in say 10 years, I'd have 9 years (and be closer to the age where I could increase my contributions without penalty) and I could just go nuts on my TSP.

Thats kinda my thought process.

After scanning the replies, I don think anyone mentioned that you cannot deposit money directly into your TSP. I recently had some extra cash that I had wanted to transfer to my TSP, the only way it was going to work was increase my allotments..

IRQVET wrote:Main goal is to pay off the house early. I'd pay extra on my mortgage and keep my 30 year mortgage, but I don't have the discipline and I'd find other ways to blow the cash.

Very well then; if your mortgager is willing to switch to an automated bi-weekly payment schedule (pay them half your mortgage every two weeks)--you could shave up to 8 years off a 30 year loan:

https://www.daveramsey.com/blog/how-to- ... ch%20year.

IRQVET wrote:So come tax time I'm looking to refinance my mortgage down to either a 10 year or a 15 year loan. I'm also considering, since I usually get around $5,000-$6,000 back from my tax return every year; I'm wondering if I should throw that money into my TSP or put it toward my mortgage?

Keep in mind I'm still 19+/- years away from retirement.

Any advice?

As long as you don't invest the return on crack, like Hunter Biden, youll be A OK, looks like you are ahead of the game . Paying down debt is a big deal, you can't go wrong with paying mortage or you can open a traditional roth IRA . Just remember that the max is 6000 and that include the total of anything you contributed to a TSP Roth IRA

Optimus, you know better than that. Leave politics out of the discussion.

Optimus187 wrote:

IRQVET wrote:So come tax time I'm looking to refinance my mortgage down to either a 10 year or a 15 year loan. I'm also considering, since I usually get around $5,000-$6,000 back from my tax return every year; I'm wondering if I should throw that money into my TSP or put it toward my mortgage?

Keep in mind I'm still 19+/- years away from retirement.

Any advice?

As long as you don't invest the return on crack, like Hunter Biden, youll be A OK, looks like you are ahead of the game . Paying down debt is a big deal, you can't go wrong with paying mortage or you can open a traditional roth IRA . Just remember that the max is 6000 and that include the total of anything you contributed to a TSP Roth IRA

Just to clarify....Roth TSP and a Roth IRA are treated differently and not combined to reach the $6k/yr