Relative to… most jobs, that’s not a lot of money. You can only “live like a grad student” so long before you start to plan on other things, such as shoring up retirement, raising a family or other goals. I was on the fat of the land when I got my first “salaried” job at $23K a year, but I had other long term goals to keep pushing it up.

So my advice would be to work on a savings habit, whether he is elligible for a Roth or whether he throws X dollars a month towards CDs or savings bonds. Heck, stick that money in a box even, but make the habit stick. I’ve been doing many years of automatic investments to a mutual fund and online seperate bank, in addition to my work 401Ks. I’m glad I’ve stuck with that habit and the time value even on the smallest dollar amount in any type of investment is something you can’t get back.

IQ84 is being published later this month and for me it’s a must-buy.

You have $50,000 to work with ($20,000 2% loan from relative, $30,000 cash). Set aside $10,000 for emergency fund, you have $40,000 working capital.

If you pay that $40,000 down on your current mortgage, you will take it from $112,000 to $72,000, and your lender may not require a re-appraisal to take off your PMI, but even if they do, that lower balance is likely to qualify. (Check with your lender.)

You will save 3.875% on $20,000 (your Dad’s loan) or $775 a year. You will save 5.875% on $20,000, or $1175 a year on your contribution to the pay-down. You will save about $650 a year on PMI. Total, about $2,600 a year. You will pay a little over 2% more interest on the remaining $72,000, compared to what you would pay if you refinanced with FHA, or about $1,500 a year (decreasing as you pay down the loan).

So if you just pay down your current mortgage and get the PMI off, you’ll have a net savings per year of about $1,100, plus the one-time savings of the $5,600 in closing costs. The saved $1100 is going into paying down the principal of your loan faster, so you’ll be done with your mortgage at least 7-8 years earlier than if you refinanced. (I haven’t done the calcs; it might be more than that.)

I wouldn’t waste $5,600 on refinancing. Your monthly payments will be higher than if you refinanced (because you’ll be repaying your Dad) but it sounds like cash flow isn’t a problem for you so the issue is what’s the best financial investment.

A quibble about terminology:

Trent, the “assessed” value of a home is the value placed on it by the local tax assessor for purposes of property tax assessments. Depending on the jurisdiction, the assessed value may be a rough approximation of fair market value or may be reduced by various deductions. There is never a charge imposed for finding the “assessed” value; anyone can look it up in the assessor’s records, often online.

Lenders usually rely on the “appraised” value of a home, performed by a private appraiser and intended to reflect fair market value. The cost of the appraisal is usually charged to the borrower. If the loan requested is far below the assessed value, a lender may choose to skip getting an appraisal, but that’s pretty rare these days, since in rapidly rising or falling markets the assessed and appraised values can be quite different.

That being said, the “distraction” comment was second-hand and may not have been accurate, and who knows who said it or why. Moreover, although you were fired from the temp job, you didn’t say you were taken off the rolls of the temp agency, who is really your employer. Personally, I think a claim would be a stressful waste of time, but you need to satisfy yourself on that.

Also, all MLMs are scams. Every single one of them. Never, ever, ever get involved with any MLMs ever.