Why We’re Not Refinancing Our Mortgage

Posted by Mrs Money on January 2nd, 2009

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house.jpgWith mortgage rates at all time lows, I’ve seriously been considering refinancing our mortgage. We actually have two mortgages: a first mortgage and second. When we purchased our house, we decided to take money out of savings to pay off some student loans so that we would be qualified to spend more on a house because we didn’t have as much debt. So instead of having a larger down payment, we opted to do an 80/15/5 to avoid paying PMI (private mortgage insurance). I feel good that we at least put that 5% down. I’d love to get rid of that second mortgage and combine it with the first, but our loan to value is not low enough now to avoid PMI. Oh well.

I’ve run the calculations, and to break even from the points and whatever from refinancing, it would take us about two years. I think that with us being unsure about where we want to live permanently it wouldn’t make any sense to refinance now. Who knows if we’ll be in the house in two years? I’m pretty confident that we will be just to break even with the value of our home (we’re hoping) but I guess we can’t predict the future. If we lived in the same state as one of our families, I’m sure we’d stay in our house forever.

If you own your own home, are you considering refinancing?

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12 Responses to “Why We’re Not Refinancing Our Mortgage”


  1. We’ve talked about it but haven’t really crunched the numbers yet. I think probably rates are going to fall for a little while yet, so we’ll probably revisit this in the spring.

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  2. MIss M says:

    I’d love to refi but I probably won’t be able to. I’m horribly underwater so a true refinance isn’t possible. If my lender kept the loan they may be willing to negotiate, I need to call and find out. Like a lot of people I can afford my payments, have great credit and won’t qualify for any help or program. Your logic is good, but are you sure you won’t stay longer? I thought I’d be out of this house in another year or two, now I’m stuck.

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  3. We got a great rate originally so rates aren’t low enough to refinance yet. But it is something I would consider if rates get low enough.

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  4. Momthing1 says:

    I did a re-fi last March and have a 5.25% 30 year fixed. I’d look at a re-fi again if I could get 4.25% and my house value shot up; it seems unlikely both things will happen simultaneously, so no re-fi for me.

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  5. We’ve just started the re-fi process – going from 6.25 percent to 4.875. It will take us about 2 years to make back the closing costs, but we’ll save a ton of interest on the life of the loan, and we plan to spend the rest of our lives in this house. Currently awaiting an appraisal and hoping we can escape PMI (we currently pay that, but if our value has increased enough, we won’t need it.)

    It’s a tough call, and hard to figure out when you are thrown so many different numbers and scenarios. Sometimes you have to go with your gut.

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  6. MIss M says:

    Update: I called my lender, but still no dice. They are holding my loan but even modifications have to conform to the 80% LTV. I tried their free home valuation, it was very, very ugly. I would have to bring $153,000 to the table to close!

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  7. I’m only at 4.875% and whilte that is a once-a-year adjusting ARM, but still can’t justify it since I don’t know how long I’m staying here…

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  8. Home loans work a bit differently in Australia. Here most people get a 25-year variable rate loan, as fixed rate loans are only available for terms of 1-5 years. However, interest rates here have been slashed due to the GFC, just as in the USA so I’m looking at fixing our home loan rate for 5 years. We have an investment loan fixed at 6.99% (for another 3 years or so), but our home loan is currently at the variable rate (currently 6.29% after dropping from around 8.9% at the start of 2008). I’m waiting for rates to drop a bit more in early 2009 and will probably convert it to a fixed rate for 5-years as soon as fixed rates get down to close to 5%. At the moment our bank is offering 5-year fixed rate of 6.44%. I pity anyone how took out a 5-year fixed rate at the start of ’08, back then some commentators were saying fixed rates looked attractive at around 8% as they were below the variable rate!

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  9. Mrs Money says:

    Kristen @TheFrugalGirl- I think if they get lower we may revisit it too. If we can get a good deal it may be worth living here forever. The only problem with living here is it’s so far from family that I worry we’ll want to get out of here in another couple of years!

    MIss M- That is crazy! I am so sorry. It sucks that people get penalized for doing the right thing (like making their payments on time).

    Ashley @ Wide Open Wallet- I hope it works in your favor! I wish we had gotten a lower rate up front too.

    Momthing1- I’ll keep my fingers crossed for you! You are getting a whole 1% less rate than we are though, so that should make you feel a little better! ;

    Christina @ Northern Cheapskate- WOW! That is so great! I wish I knew we were staying here forever.

    Gary LaPointe- That sounds like a great rate now! I hope things work in your favor.

    Enough Wealth- That is so interesting! I had no idea that is how Australians got home loans. Good luck getting a better rate!

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  10. jennifer says:

    I have a good variable that can’t go up more than $50.00 one way or the other once a year. So it has been good for me. I want to pay off all my credit cards this year and then maybe I’ll refi to maybe get enough to buy another rental property (if I have the stomach to do it again) or else I’ll save my money under my matress.

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  11. Mrs Money says:

    Jennifer- Good luck with paying off your credit cards. I know you can do it! I hear you about storing the money under your mattress.. :P

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