We bought our house as a short sale in 2009 for $360,000 with a 30-year mortgage that had an interest rate of 5.5 percent. We were able to make the payment (nearly $3,000 a month), but it was a struggle. Living in Warwick, N.Y., high property taxes are a reality of homeownership; ours are usually over $9,000 a year. Being a stay-at-home mom and struggling to live in the quaint community we call home required discipline and a lot of it. We were looking for a break -- and refinancing fit the bill.
Last year, in June 2012, we were able to refinance to another 30-year mortgage with a new rate of 3.85 percent. We were thrilled. The money we had to invest toward the refinance was rolled into our mortgage payments, so there was little up-front expense. A year later, we had already recovered the few thousand dollars it cost us to refinance.
Of course, being able to re-fi was great for us in that it actually increased our income by lowering our mortgage payment. We now pay $250 a month less than before we refinanced. This may not seem like a lot of money to most people, but it has given us invaluable room to breath.
Prior to our re-fi, we were living tight. We are the kind of people who live within our means. We cook at home, rarely go out, do not buy the name brands, and often have to say no to friends when they invite us to join them for dinners out or leisure activities. I admit, I go so far as to cringe around birthdays, because that extra gift I need to buy will certainly impact that month's budget.
With the extra $250 a month, I am able to relax about the little surprise expenses that always seem to pop up -- or enjoy those spur-of-the-moment indulgences, like sneaking a new shade of lipstick in my grocery cart every so often guilt-free.