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…
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.