Should we refinance soon?

Based on the numbers you gave, a refinance would be beneficial for you. I would suggest refinancing to a 15 or 20 year term , the payments would not be that much different but this would enable you to drop your interest rate by at least 2 points, pay off your home sooner and save you tens of thousands of dollars in interest on your mortgage. Even refinancing to a new 30 year may have benefits. Have a loan officer run a few scenarios for you and crunch the rates and numbers to see when your break even point is. I am in California and would be happy to assist you. Please click my profile for contact details. Gregorio Denny -- WeFixRates.Com --

Refinancing would DEFINITELY be beneficial to you. You should combine your 1st mortgage ($180,000) and your second mortgage of ($25,000). With the associated points and costs it would give you a total mortgage of about $210,000. You most likely could receive a rate of 3.875% for 15 years FIXED. This would give you a principal and interest payment of about $1,846 per month for 15 years. Hope this helps.

The other posters have given good advice and it does appear that a refinance will be in your best interests if you intend to stay in your home for at least the next 5 years. However the main issue in my view is the current value of your home. According to value charts in your state prices have not appreciated to the point that they were in 2002 when you purchased. In fact they are still anywhere from 15 to 30% lower so an appraisal of $200,000 would be possible. Make sure you discuss this scenario with your loan officer before committing to the loan as it will definitely cost you more money and may rule out a refinance completely.