So, remember when everyone was looking to refinance their mortgage every time the rate dropped and people were going through the process, like, once per year just to get a better rate as if the interest rate were the only think that mattered?

One of the “warnings” was not to bother unless you’d be in the house for more than 5 years since that’s how long it would take to make it “worth it”. I suppose that still holds true today.

While I was aware of the “historic” low rates, I wasn’t really planning to take advantage but, as fate would have it, I too refinanced back in 2010.

I didn’t rate shop. I didn’t even payment shop.

My sole goal was to get out from under the “required” but totally unnecessary PMI payments that I’d been making to CountryWide. You can read up on that, at-the-time, seemingly endless headache here.

In the end, as a result of the refinance, I was able to finally rid myself of Private Mortgage Insurance (PMI) and, as a bonus, even got my monthly mortgage bill under $500. Pretty sweet, huh?

There was a discrete downside, though…

Closing costs.

I don’t recall if I paid any and I’m not certain I could have afforded to at the time.

Anyway, like they often do — and what the 5 year warning is really about — they roped the closing costs in with the new loan.

Going in to the process, my mortgage balance was $92k-something and coming out with the new lender, the balance was $97k.

As my balance today is $92.5k, I’m just now getting back to where I already was 3 years ago.


So while, in the grand scheme of things, my re-fi resulted in 36 mortgage payments that didn’t move my balance one bit, I still don’t regret it one bit.

The disappearance of PMI and an incredibly low mortgage payment outweigh 3 years of “catch-up” payments. No contest.


  1. For us, when we refinanced at the end of 2011, our payment went up $150 but our total principle per month went up $500, so it was a $350 ‘gain’ per month. Our closing costs were $2000 and we elected to roll them into the loan. By my calculation, it only took us about 6-9 months before we were ahead of where we would have been without having re-financed. That was a no-brainer. I’m surprised it took so long for you. I’m guessing you did not shorten the term of your loan, which if you took another 30 year loan, you actually extended the total term. My suggestion would have been to re-finance to a shorter term loan, or to make extra payments toward your loan that would allow you to complete the payoff in the original loan term. I could be wrong since I don’t know the numbers, but I suspect you could taken a significant amount of time from what it’s taken you to recover those closing costs.

  2. You’re right, I went with another 30 year loan.

    I’d never consider shortening the term as I find it MUCH safer to ensure a smaller payment. Shortening the term of the loan can easily be done by making extra payments — on my own terms and schedule instead of the lenders term and schedule.

    Key reason is that if you’d asked me 4 years ago if I’d be spending $2000+ on daycare alone each month, I’d have to you you we’re crazy.

    Of course, now that I am paying $2k+ per month on daycare, I’m really really glad that I don’t have to pay a $1500/month mortgage bill like I once had to.

    I leaned more towards flexibility, I guess…and my mortgage will still be paid off long before the “original” 30 years are up.

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