My mortgage is about 16% of my gross income as a 39-yr old single mom. After prop and income taxes, homeowners insurance, other payroll deductions (mostly health/dental insurance), shorter term savings deposit (smallish), college (big), and retirement saving (14% of gross) the minimum payment is about 35% of my takehome pay. I do pay extra every month to add up to more like a total of 13 payments a year (instead of 12), which will make my payoff happen somewhat earlier. I have no other debt and pay everything off each month. No car loan, pay off the CC's each month, no student loans left. My retirement saving of 6 digits is my biggest asset for my *very* 5-digit income. The best 2 pices of advice my dad ever gave me were:1. to maximize your pre-tax retirement savings early (I was 24 when I started) and I have diversified into Roth IRA's as well and 2. Pay yourself into savings first each paycheck. If I want to feel really good about my net worth, I calculate the home equity into it, but in reality, I do not ;) I wouldn't want to have to sell my home to get my money out for spending money even in retirement. I think Americans in general are too greedy about their "forever home" and ideals. Live within your means and don't worry so much about keeping up with the Jones's. My home may not be the biggest, or have the latest appliances or doo-dads, but I can well afford it and keep it clean without hiring help or spending too much of my valuable time on it. I live well with my kids in 1200 sq feet. No wishes for more. I have invested in top-quality finishes and maintenance of my home and its value has skyrocketed in the 8 years I've owned it. Although I somewhat understand the "trading up" attitude--especially for those who live in a very expensive real estate market like SF or NYC--I think that the expectation that everyone will do that is unhealthy. Who REALLY needs 4500 sq feet for 4 people?

Thanks for all the responses. Housenewbie-I found out a stop payment on an ACH is different than one on a check. It's either the "amount" or the "vendor". But, after making numerous calls and FINALLY getting to speak with someone in the ACH dept of the bank who actually knew something. Apparently standard practice at my bank is if they try to put though an ach and it is nsf they "hold" it and (on good customers like myself) check the account every couple of days waiting for the $$ to be there. They try it 3 times themselves before they send a rejection back to the mortgage company. So that's why the mortgage company never had a record it it being rejected and me paying it 2x. So-I HAD to do a ach stop payment (over the phone thankfully-not dealing with the branch again) because the bank would have tried a 3rd time and taken the $$$ that was in there-shorting all my other bills for the month with all getting late charged. Or if not enough $$ then try another nsf ($20) before they would reject to the mortgage company who then would've tried 2 more times - so this really would have snowballed. And the ACH person on the phone was nice enough to reverse the 2nd nsf fee I was charged. I got the email from the mortgage company today that my payment was rejected. (But remember, I am already paid so I'm not worrying - much). Also - a revocation can be revoked. (They didn't tell me this at the branch). So-big lesson learned. CAREFULLY check before you hit that "SUBMIT" button RA

It is really hard to decide; my rule of thumb has always been, which will require the least out of my pocket in the long run? Without doing all kinds of calculations (that I can't do, but I believe that there are websites that can calculate it for you) I can't say for sure. There are advantages to the fixed rate refi, especially lowering the interest rate on your original balance; but could you get a lower rate and less out of pocket from a HELOC, paying it off first with the same discipline that you have been using? Have you talked to a credit union? I did take out a HELOC from my local credit union in order to pay off my mom's condo loan; there were no closing costs, fees, etc and the lowest interest rate in town. That was before the crash -- and it was long ago paid off, so I don't know if such a good deal might still be available. Don't know what repairs you need, but some large companies (hvac, roofing, siding) will offer low cost financing too -- you have to read the contract very carefully to be sure that you are getting what was promised.

Closing costs come along with a mortgage or more accurately I suppose a loan? There are basically two types of closing costs. Those related to the purchase (aka transaction) and those related to borrowing any money to facilitate the transaction. Those related to the transaction are charged whether you are taking out a loan or not. Examples include title insurance, property taxes, transfer taxes, attorneys' fees, agents'commissions, certain other types of insurance. Some of these charges will be a fixed fee, others based on a percentage of the sales price. Some of these fees are charged by the title company and some by the state/local authority. The second set of closing costs are those related to taking out a loan. The appraisal fee (which is usually a fixed charge - say $350)and the origination fees (aka points - which is based on the amount of the loan. Each point is 1% of the loan amount). Seems like a lot of the closing costs come from the title company - and you have to do that anyway? I.e. why are loan closing costs a big deal? Most people finance their home purchases by borrowing the money. It costs money to borrow money. The largest cost of borrowing money is, of course, interest determined by the interest rate. The other big cost of borrowing is the origination fee, aka points. It's a big deal because it is a one-time charge based on the amount borrowed. So, it's variable. A point is 1% of the loan amount. If I'm buying a $500,000 house, borrowing 100%, and paying 1 point, it's going to cost me $5000 (just drop the last two zeroes on the loan amount.)If I put down 50% and finance $250,000, the point will cost me $2500. Some borrowers find it advantageous to "buy down" their interest rate. They might pay 2 points or more to purchase a lower interest rate over the life of the loan. Other borrowers might pay zero points and buy a slightly higher interest rate. Lenders will often tie interest rates and points together as a marketing tool to stand out against their competition. So, depending on the amount financed and the number of points charged, this particular cost of borrowing money can make or break the loan for a potential buyer. And do mortgage related closing costs go up with the amount of the loan? How why? Some do, some don't - see above. Why? 'Cuz. (LOL) Then depending on the last, only buying a house full price/cash is an advantage? A hefty downpayment and smaller loan gets you (no)where? Not necessarily. Sadly, Mary, this is where the math becomes really important. But a good mortgage calculator with a full amortization schedule can be a big help. It will calculate not only the monthly payment but the total interest cost of the loan (prepare for heart failure) and enable you to model different interest rate, loan amount, and payment scenarios. Stop thinking of it as math and start thinking of it as money...playing with money. So when people talk closing costs - are we talking two types? The type you pay no matter what - say you bought full purchase price - or even inherited a house. And the ones that come along with a loan? Which are loan ones and which are not? Yup...see above. Mary, the best way to understand the total transaction costs of a real estate purchase is to take out your settlement statement from you recent home sale. This is called the HUD-1. Then go to HUD's website and follow the line-by-line explanation of what each settlement line means. You'll see right away that the form is divided into loan costs and other costs. Doing this is akin to doing your taxes by hand. Despite the miracle of tax software, you will never understand our tax system better (and how it applies to you) than after you've done your taxes with paper, pencil, and a good tax manual. Something, each taxpayer should do at least ONCE in their lifetime. Same goes for the HUD-1. It's work but it's good work. Hope that helps. The concepts, guidelines, and rules-of-thumb are important but no piece of generic advice will ever replace working the numbers specific to YOUR situation, your financial needs, your psychology, and your future situation. Mary, I know how much you want to buy a home versus renting. You love "home" - it's a passion, a hobby, and a lifestyle for you. You also want a secure financial future and you have doubts about how these two fit together right now. I think it's great that you keep asking questions and seeking answers. I read that you had engaged a financial planner. As you review your decisions, you might want to start a new hobby - getting past math anxiety by learning more about consumer finances and financial planning. The math is such a small part of it. It's much more a process of thinking and mindset. You might want to see if your local county or community college offers financial education classes. It's a great way to meet people who have similar interests and it can become downright addictive. Fifteen years ago, I didn't know there was such a thing as a financial calculator...now, I carry one with me all the time. Playing with mortgage scenarios, calculating investment earnings, etc. is a great way to pass time while waiting in lines...sort of like having your own financial game-boy. Good luck!