Thursday, April 25, 2013

Refinancing--Not as Difficult as It Sounds

Our 2013 Appraisal Photo
When David and I bought our house in 2005, we planned to live here 2 years--max. We were going to stay just long enough to pay off Harvard and save for a down payment on a larger home. The market was hot. That wouldn't change, would it?

You know what happened 2 years later. We suddenly owed about $20,000 more on the house than it was worth. We were stuck, and we weren't paying off Harvard quite as quickly as we thought we would. Our "dollhouse," as it was advertised to us in the listing, was actually a matchbox. The builder had done everything as cheaply as possible. To date we've replaced the then-4-year-old roof, ALL of the plumbing (no joke--even the water line to the street), the driveway, the front porch, and lots of other little things. Most repairs were not covered by our homeowner's insurance. I could tell you stories you wouldn't believe.

After the market crash, David and I sat on our hands. We just couldn't decide if it was worth the closing costs to refinance the house. Yes, rates were much lower than we were paying, but a refinance only paid off if we stayed here for at least 3 years. We weren't ready to commit to our matchbox for that long, especially if we were going to have children.

Our thinking changed at the end of March 2013. David was listening to the radio on his way home, and he heard that as of April 1 the government would no longer allow closing costs to be rolled into a refinance. If we were going to refinance, now was the time. That night we took a hard look at our lives, and we admitted to ourselves that we don't need a bigger home. We won't need a nursery. We never host out-of-town guests. In a pinch, we can host a huge dinner party. And we now have the best-built home in the neighborhood.

Sure, we have to moave all the furniture out of our living
room, but we can get the whole family around one table!
The next day I e-mailed Kim at MidSouth Bank. She had originated our loan in 2005, and Kim had recently sent me a letter encouraging us to refinance. She responded to the e-mail almost immediately, and by the end of the day I had all the paperwork she required and a good-faith estimate for the refinance. The next day David and I signed some stuff, the next week our house was appraised, and today we close. Easy as pie. (And I make lots of pies.)

If you haven't refinanced, I encourage you to consider it. With what amounted to 1 day of work, we have lowered our monthly payments by $50 AND knocked 12 years off the term. Dave Ramsey would be proud!

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