Oct 21, 2010

The Effects of Becoming a Work-At-Home Mom: Refinancing Our Mortgage Again

Early last year, we refinanced our mortgage because rates had gone down enough that we were able to get a rate that was 7/8% lower. This time, we will get a rate that's another 2/3% lower, so we'll be at 4.125% (I'm hoping that it will be even lower by the time we close, though I don't think that's going to happen).

The last time we refinanced, I was all about saving money and lowering our overall payments. But back then, I didn't foresee myself no longer working at this point in our lives.

This time, I am all about the lower monthly payment. After all, I've quit my job and make a miniscule fraction of what I used to make.

We can certainly continue to make our monthly payment now, but I like the wiggle room that a lower monthly payment will give us. And we'll continue to pay extra on the mortgage, just not as much as we used to. We may, in the long run, end up paying more for the house than we would have if we hadn't refinanced. But we're confident it will be worth it - I am so much happier now than I was when I was working full-time, and I think that as the kids get older, I'll be even happier that I am around a lot. I've always wanted to have the house that the kids hang out at after school, so I know what my kids are doing.

I have to admit though, that I'd forgotten how much paperwork is involved in a refi. And, I'm waiting for the appraiser to arrive right now!


Camille said...

We bought our town home in June 2009. Last month my dad (a retired banker) suggested we look in to refinancing. I was shocked to find out that we could get an entire 1% lower! I can't believe the difference in the monthly amount. We'll use the extra wiggle room to pay more on student loans. I am a bit surprised at how long it's taking -- 90 days is the set goal. And I'm hoping the rate is lower when we finally close, too!

CJ said...

I would love to refinance since my rate is $7.5% (I have great credit, just happened to buy a home 15 years ago when that was the going rate). But I only have about 3 more years of payments and have been told I'd pay more in closing costs and other fees than I would save having the lower monthly payments. I couldnt refinance earlier in my loan because interest rates were still high.

Chief Family Officer said...

@Camille - Interesting, we were told that a 30-day lock wouldn't be anywhere near long enough. It doesn't seem like it should take that long!

@CJ - I'd take 7.5% if it meant payments for only three more years. Congratulations - that's awesome!