We bought our house in November of 2000 (though we moved in the next January) with a 30 year mortgage through a first-time buyer's program (lower rates) and with scraping every penny we could. Just over a year later, interest rates dropped and we refinanced (for 30 years). We were pretty comfortable that we had among the lowest rates we could get (5.875%), and our house had increased so greatly in value (in just one year!) that we were able to drop the PMI.
Last year we paid off our mini-van and realized that we could afford to put an addition on our house. We shopped around, and found the best rate on a Home Equity loan (6.79% for 15 years).
This weekend there was an article in the paper about how loan rates had dropped and that it was a great time to re-finance for all the people who had bought houses during the housing boom of the last few years. For the heck of it, I checked rates at our Credit Union and found that they were lower than our current mortgage and WAY lower than our Home Equity (5.75% for 30 and 5.625% for 20 years). We called to see if we could refinance--maybe even dropping to 20 years--and roll the two together.
After making the appointment and getting the stats (we'd be saving a couple hundred dollars a month even with the 20 year loan), I happened to look at the website for our credit union again and saw that 15 year loan rates were even lower (5.125%). G. went to the appointment and had our loan officer crunch the numbers.
And we decided to go with the 15 year!
It is kind of scary, as our payments will go up about $100 from what we were paying for both loans, but it's unbelievably exciting, too. We will be saving THOUSANDS of dollars in interest and we should be completely debt free in fifteen years! (right now the mortgage and home equity loan are our only debts other than month-to-month credit cards that we always pay off)
I'm so very proud of us!