Currently viewing the tag: "refinance"
One of the items on the checklist of refinancing a mortgage is a home appraisal. Any bank will require that you pay for an appraisal on your home so that they know they aren’t loaning money out that isn’t covered by the value of the home. Well, I recently checked that box for my refinance, and the appraisal came out to be $150,000!
Zillow currently appraises my home at $140,400. Needless to say it was a pleasant surprise when an actual appraiser came through and tacked another $10k on top of that! Technically this puts me another $10,000 or so above Don in the standings, but we’ve decided not to include the appraisal in our net worth’s since it won’t be an apples-to-apples comparison. Don has yet to have his appraisal, and even when he does it is likely to be done by someone different.
So I guess for now we’re sticking with Zillow. Oh well, I still expect to dominate Don in this competition.
Wow, that’s a big drop from August, isn’t it? Well it was not unexpected, and was partially due to a couple of miscalculations on my part. In August I forgot to include my fiance’s car loan as a debt, and I also neglected to break out some tuition assistance money that was sitting in my account at the time. So that accounts for about $11,000. Next time I will have to consider any tuition assistance as an asset (cash) and a debt (owed to the school) and we should have better agreement.
Also, I shelled out $4000 for home improvements this month (follows up a $3500 deposit from July). I am now the proud owner of some brand new vinyl replacement windows which will reduce my heating costs this winter and have already improved my life around the house. Next up: siding! That’s another $12,000, so expect another dip before the summer is over.
Assets: $350,168.82
Cash: $25,909.36
So that dropped about $10k over the last month. Again, part of that is home improvement, part of that was the fact that I was counting about $9,000 of tuition assistance as my money, when in fact it was merely transient.
Property: $179,000.00
For whatever reason, Zillow continues to up it’s estimate of my home’s value: I’m not going to argue. Until my taxes go up, then I’m going to argue.
Retirement Accounts: $145,259.46
I would like to thank Congress for this. Their responsible actions in Washington led to feelings of security and positivism on Wall Street, resulting in losing some money for me. Honestly, not as bad as it could have been.
Liabilities: $122,090.18
Mortgage: $118,012.50
I’m not sure if you read my post about re-financing my mortgage, but it’s definitely on my radar. If you believe the Zestimate of my home value, I have about 21% equity, which puts me in just the right place to refinance in today’s economy.
Credit Card: $577.68
Yes, I know. I bought some shoes for my wedding and a bunch of Kindle books: sue me. This will be paid before the end of the month.
Car Loan: $3,500.00
Oops, completely forgot about this one because it’s the only bill I don’t currently pay for both of us. I’m sure it will come under my purview in just a couple of months, but for now it’s a little off my radar. However, I think it’s about $3500.
Net Worth: $228,078.64
So my net worth actually dropped by almost $14k over the last month due to a host of things, not least of which was a miscalculation. Of course, this is not what we like to see, we like to see a steady increase! However, the next few months are going to make that difficult with the wedding (upcoming post) and the rest of our home improvement work. Luckily, Anna continues to save at a good clip (her cash account went up by $2000 this month!), so we should see better numbers in the future.
When mortgage rates dropped to record lows last year, I dragged my feet. I looked at how long it would take me to recover the closing costs, weighed that against the savings and bet against staying in my house another 3-5 years.
But that was last year.
Rates are once again dropping to rock bottom and I’m not going to let them slip past me again.
More than 63% of residential mortgages have interest rates above 5%, says market researcher CoreLogic. Though today’s rates would be attractive to many of those homeowners, the pool of people who can benefit is restricted.
Forty-six percent of homeowners with a mortgage have equity of 20% or less in their homes, CoreLogic says. That makes refinancing harder without having to pay mortgage insurance. High unemployment and tight lending standards will also keep out many borrowers.
Many of those who can refinance are trading 30-year mortgages for shorter terms with lower rates. In the first quarter, 34% of those refinancing who paid off a 30-year loan switched to a 20-year or 15-year product — the highest share in seven years, Freddie Mac says.
So here are the facts:
The House
Description: 100+ years old colonial; 4 bed, 1.5 bath; needs a paint job
Purchase Year: 2005
Purchase Price: $133,000
Latest Zestimate: $148,000
The Mortgage
Origination Date: 2005
Original Amount: $126,500
Rate: 6.5%
Monthly Payment (P&I): $798
Current Amount: $118,000
Current Rates
30 year: 4.25%
20 year: 3.875%
15 year: 3.375%
10 year: 3.125%
My Options
I definitely would like to take this opportunity to reduce my term, I can get a 20 year loan and shave 5 years off of my mortgage while still reducing my payments by up to $90–this seems well worth it, so I definitely want to go for that.
The other question is whether or not to borrow the closing costs along with the principal. The bank estimated around $3300 to close the loan, and if I roll that in it would instead of reducing my payments by $90, it would only reduce them by $75. So the question is: do I pay it out of pocket or roll it in?
Out of pocket:
I’m now out $3300, but I’m saving about $15/month more than if I rolled them in. So how many months would it take to make up for the loss?
$3300/$15 = 132 months, or 11 years.
Wow, end of debate. There’s not a chance I’m spending 11 years in this house, unless there’s a zombie apocalypse and I’m forced to board it up and defend it with shotguns. In which case, I think the bank either will have forgiven the loan, or will be staffed by roving bands of flesh craving beasts who seek only to destroy… You know, like the Wall Street banks.
Well, all that remains now is to do it! I have collected all of the documentation, I just need to run it down to the bank and let them have a look at it.
Wish me luck!
Donald
Age: 32
Assets: $401,669
Liabilities: ($129,290)
Net Worth: $272,379Memberships
Paul
Age: 31
Assets: 477,660
Liabilities: ($123,725)
Net Worth: $353,935
