The military transferred us from Germany to Fort Knox, Kentucky, in 1986. The country was in the middle of a recession and mortgage interest rates were sky high. As my husband neared retirement, we decided to build and make Louisville our permanent home. Our first mortgage was $68,000. We financed at a rate of 10 percent for 15 years with a monthly payment of $740.
Had we stuck to the plan, I wouldn't have a mortgage at this time. However, as life goes, we divorced. In 2004, I purchased the mortgage into my name only. Over the married years, it accumulated $35,000 in additional value. It appraised at $103,000 and I was able to buy it for $70,000 at 5.25 percent for another 15 years. The new payment was only $565 a month. I could handle that.
I owed just below $40,000 in November 2011. At the same time, I began paying on student loans and acquired a new car. Still single, I managed, but the rising costs of everything else tightened my budget.
When interest rates began dropping to 4.2 percent, I began playing with an amortization calculator . I checked out different scenarios, involving mortgage balances, rates, and lengths of loans. I knew I could bring the payments down to about $300. I hesitated, because I had only eight more years to go on the current balance. The thought of the paperwork, appraisal fees, bank fees, and termite inspections was overwhelming. I didn't want to go through all of this again.
In 2012, my financial institution then lowered its rate to 3.5 percent. Just out of curiosity, I emailed the loan officer to ask if I would qualify for that rate. She answered the following day and affirmed that I would. "Oh man," I thought, "it's now or never!"
I decided to refinance $50,000 for 15 years at a rate of 3.5 percent. With the extra $10,000, I paid off my student loans. Before refinancing, I paid $715 a month for both loans; now I only have to pay my mortgage payment, which is a mere $357.
I qualified because my credit score is in the low 800s, I've been with the same employer for 14 years, and the value of the home increased to $160,000.
The goal remains to pay off the loan. However, in the meantime, it is really nice having extra cash to enjoy the finer things in life.
