What the ratio fails to factor in is the key question of how long you are going to stay. We took a gamble on a refi in 2012 and lost about $5K in equity. But we got a five year shorter term, a 5% shorter monthly payment and an interest rate that dived from 5.875% to 2.75%. So my equity right now is about where it was when we did the refi.
It made sense only because we planned to stay.