I first have to say how frustrated I am that we are in this mess to start. And I will never forget how frustrating, emotional, and tiresome it is to clean it up.
Based on current interest rates, if we were able to refinance, it would free up roughly $300 a month toward our snowball. Sounds good....until you factor in.....
Our house took a hit in value (as did pretty much everyone else's). At this point, based on the town assessment, our house is mortgaged at about 96% of the value. This bites the big one. We have 2 options; neither option really does anything overwhelmingly positive for us.
If we do a conventional refi, then we have to pay PMI. There goes the savings.
If we do an FHA, we will probably need to bring about $3000-$4000 to the table at closing.
We have the insurance check from the car accident, and based on when we went to closing....we might be able to scrape up the money for closing on FHA. But then we lose that money toward debt repayment (but the lower payment in general will still be good; Plus, we will get our escrow money back, which will go toward debt.)
We could try and refi now that the rates are low and just basically hit "reset". We could try and refi later and hope that the rates stay low and that the value of the house goes up. Not sure which is the way to go.
I don't think there is a right or wrong answer. Just a commitment one way or the other.