flu is right. You’re extending the loan. And the new loan is slightly less – because you’ve paid some (not much) principal down.
A better way to approach it is to refinance when you have a significant drop in rates (like your first and 2nd refi). Then make the SAME payment… so you shorten the length of the loan.
That’s what we did a few years ago – kept our payments the same, despite the new lower “minimum” payment… We knew we were able to make these payments. The extra amount is applied directly to principal.
We like seeing the principal go down so much, we increased our payments more. We’re now looking at paying our house off completely in less than 2 years. I’m loving the idea that I’m close to being able to write a check for the balance on the mortgage at any time. (I’d do it now, but it would wipe out my emergency funds.)
