I wish I could say we could refinance to a conventional 30 yr, but we are not able to because 1. we do not have enough equity in the house, even though we pay $100 extra a month on the principal, and 2. we don't have enough to pay down to 20% plus closing costs. I don't want to blame housing prices but that is also a factor.
We are not planning on moving really ever, maybe in retirement 30 yrs from now, so I guess I feel the need to lock in the 3.75% rate and not worry about the pmi right now since we would still be decreasing our payments.
Our mortgage is the one big financial miss I feel we made. We do pretty good saving for retirement/emergency funds/roth iras. No car payments, no student loans. So for $700 to lower the payments, even with the increase in pmi, I think this makes financial sense for us to do. I just need some other financial savvy people to agree with me :)