The Rewards of Refinancing

About two months ago I refinanced my house and it was by far one of the best things I’ve done, yet. It took some education to really understand what was going on with my situation of being “upside down” in my house, and how the refinance was definitely to my benefit. Not only did I have to look at how the economy was affecting me currently, but I really had to think about my long term goals.

One of those long term goals is wanting to sell my condo in a few years and move to something different. After going through the appraisal process and speaking with a realtor, I realized that realistically I was going to have to sit put for a few more years, thus moving forward with the refi was a good move.

My original interest rate was 6.75%, but after the refinance it went down to 5.3%. That’s a drop of 1.43% which ends up being a savings of $45,000. Many people think, “What will an almost 1.5% drop in interest really do for me?” The answer for me was $45K. Yes, this is over the 30 year life of the loan, but that is a huge savings for just a simple phone call.

Although it cost me roughly $560 to refinance, I was able to pay cash thanks to the savings that I’ve been building up. It was very difficult for me to take from my savings, considering we are in a contest and I did just take $500 out, a few months ago, to replace my water heater, but I’m proud that my credit card stayed tucked neatly away.

The benefits of my refinance include much more of my monthly payment going toward the principal, saving $80 a month and $45K over the life of the loan.   

 

Comments

[Rachel]

Amy, Good work!! You are "Squeezing the sponge" so to speak -- lowering your monthly expenses in every area helps. Great interest rate and $560 to refinance isn't bad.