I’m very proud to announce that this chapter will end our story on getting a refinance. As of Monday, we finally closed on our new mortgage under the Home Affordable Refinance Program (HARP)!
Here’s what has been going on since last time:
Our Home Appraisal:
So after the initial consultation and deposit, there was not a lot to do except wait until the estimator came back with his appraisal of our house. And so we waited, and waited, …
And after 8 years of not “really” knowing how much our house was worth, we finally received an official home appraisal as part of the process. How did we do? Bum-badda-baaa (victorious trumpets sounding ….):
• $137,000. (sad trumpets dying ….) Wha-wha-whaaaa
Yes, this was a bittersweet moment. $137,000 was much less than what I hoping for given that my neighbors (with the same exact house) were given an estimate of $160,000. But on a positive note, $137,000 was just the right amount I needed to be within a 105% LTV (loan to value) ratio. If we had gone over 105% LTV, we would not have gotten the best interest rate they could offer.
This just goes to show you how much discrepancy there is in the whole appraisal / home value assessment process.
How Much Did We Save?
What was the final outcome of having done this refinance?
• Our payments dropped down by $101.36.
• Our fixed rate went from 5.75% to 3.75%.
• We dropped down from an initial 30 year mortgage to 20 year mortgage and erased about 1.14 years worth of payments in the process.
• That’s a total savings in interest of $41,104.97.
So what would happen if I kept paying the extra $101.36 by adding it to my principal each month?
• I’d pay off the whole mortgage in 17.0 years instead of 20.0 years.
Want to try this for yourself? Download my Microsoft Excel spreadsheet and try it yourself.
What Else Did We Learn Throughout This Process?
There was a lot to be learned throughout this process. The ambition to get a refinance inspired many other questions and posts (as well as many other Excel spreadsheets) that analyzed different mortgage scenarios. In case you missed any of them, here is a round-up:
Now that my refinance is complete, I hope you can use these resources and lessons to help you further in your own efforts. Enjoy!
Have you been thinking about getting a refinance, are in the process of doing so right now, or just finished getting one? Please feel free to share your experiences!
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Photo Credit: Microsoft Clip Art