I bought my house 2.5 years ago with 80-10-10 to avoid PMI. Balances are $155,000 (30yr,6.943%) and $17,000 (15yr,8%). Current value is $193k, we'll stay 3-5 years. Have excellent credit and 10 months of emergency funds. Want to have cash available and have upcoming home repairs. Should I use savings to pay 6k in closing costs (including points)? Should I combine mortgages or just refinance the first? If I just refi the first, I'd pay cash to make sure no PMI. Is refinancing smart if I'm not planning on staying long term?
There are a multitude of factors to consider when planning how best to handle such a large investment as your house. Many people find it prudent to hire an experienced financial advisor to assist with the matter, as the homeownership often is a bedrock to one's long-term financial stability.
That said, you mention that you aren't planning on staying in this house very long, so be sure to do the math and see how long it would take before the interest rate savings on the refinancing offset your closing costs and begin to produce actual savings. 3-5 years may be too short time to make refinancing a worthwhile endeavor.
Also, be sure to take a hard look at your plan for departure from this property. What happens in the event that, 3 years from now, you decided to stay long-term, or find that the local housing market forces you to stay longer than originally planned? Are the terms of the refi still manageable and beneficial?
You may want to consult with a realtor in your area and ask about the prospects of selling your house in the not-so-distant future. Depending on your locale, finding a buyer may or may not be much of concern, but you would be well advised to check into the realties of the local real-estate market. While no one can predict precisely where the market will be three years from now, an experienced realtor should be able to give you information on the area's trends and conditions that may help to give you some indication as to what to expect in 36 months.
If after doing the necessary research and planning, it turns out that refinancing your mortgage is the best option for you, you can apply for a free loan quote at Mortgage Refinance Quote.
I hope that the information I have provided helps you Find. Learn. Save.