First person: We refinanced to build our retirement home

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First person: We refinanced to build our retirement home
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The new Cebu home.

My wife and I bought our house -- a three-bedroom new build near Tampa, Florida -- in 2004 for $140,000. Our 30-year mortgage had an interest rate around 6 percent, giving us a monthly payment (including taxes and insurance) of about $1,200.

My wife is from the Philippines and purchasing a home was one of her dreams when she moved to the United States. Five years after we bought our home, she wanted to do the same for her mother, who lived in Cebu, a province in the Philippines. We had visited my mother-in-law a few years earlier. Her house was unsafe and unsanitary. She lived in a one-room hut with one bed and a stove, but no refrigerator or anything else. The sidewalks surrounding her hut were made out of boards and smelly water sloshed beneath them; the water was sewage that, as my wife explained, simply had nowhere else to go. After our visit, I had to go to the doctor. I caught a kidney infection from the visit and I believe it was during our trip to the hut.

My wife worried about her mother because of these living conditions. We also developed a dream for our retirement: to spend half of our time in Cebu and the other half here in the U.S. So, in 2009, we discussed building a new home for my mother-in-law in the Philippines. It would provide a better quality of life for her -- and it could become our own retirement home someday.

We didn't have the money we needed to build the house ourselves. We had savings, but not enough. Refinancing was the solution for us because our Florida home had some equity.

We refinanced in July 2009 and got a fixed rate of 4.5 percent. We decided on a 15-year loan, which made our payments jump up to $1,600 a month. The total amount of our new mortgage was $160,000. We received an extra $30,000 from the refinance; we combined this with our existing savings to build a house in Cebu for a total cost of $50,000.

My mother-in-law now has a comfortable, safe place to live. The house is large and beautiful, and set up correctly with no raw sewage seeping beneath its walkways. She says she loves the house.

My wife and I believe this is the best thing we have ever done in our financial lives. My mother-in-law has a nice house for the first time in her life -- and my wife and I have a retirement home for our own future.

Refinancing is the tool that made these dreams a reality -- and, we just refinanced our home again a few months ago! I work in the service industry and rely on tips, which have been declining in the wake of the Great Recession. In November 2012 we refinanced to a 15-year loan at 3 percent. Our payments with taxes and insurance are back to around $1,200 per month. I believe the investment we made in my wife's mother and our future was worth every penny we spent.

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