Normally when the economy falters a bit, it bad news for everyone. We can’t look at our 401ks – it’s painful. Thank goodness we won’t be retiring anytime soon. Wait, thank goodness? I want to retire now. Anyway, the economy. The good thing about the recent trouble is that interest rates have gone down. Oh, we aren’t buying another house but we are trying to refinance the loan on our current one. A few weeks back, our mortgage broker, emailed us and let us know it would be a good time to refinance our loan. We thought about it and when we found out that we’d be paying .75% less, refinancing sounded like a great deal.
Several rounds of paperwork and emails later, and we’re getting close to finalizing our loan. We had to have out house reappraised and we’re pleasantly surprised to find that it’s worth a little more than it was a 2 years ago. Lucky for us, a more valuable house means an even better rate. We’re looking at 1% less, a fifth less. We did the math and if we keep our payments the same (over paying each month) we would actually have our house paid off in 15 years. FIFTEEN YEARS! We going with a 30-year loan because the rate on a 15 year loan isn’t that much better and it’s nice to have the flexibility to pay less monthly if we needed to.
Micah was talking to a couple of co-workers about refinancing our loan and they told him that in the height on the real estate boom they bought their houses with loan interest rates of 18% and 22%. No, I did not mistype, I meant 22%. TWENTY-TWO percent. That outrageous. We couldn’t even stomach the 14% new construction loan. Ridiculous. I honestly can’t imagine borrowing money at that rate. Our car loan is 0.5% and student loans under 3%. I know credit card interest is around 20-25% but we pay down our balance every month which probably isn’t good for our credit in general but it keeps me from having an ulcer.
We’re really thankful to have such a low rate and to also have friends (mortgage broker) who looks out for us.
So here’s a question, if you were us, would you keep overpaying (by a lot) you home loan, or would you pay a little less every month and build up your saving? Enquiring minds (ours) want to know.