A few weeks ago, I asked all of your advice on whether we should refinance our mortgage. At the time, we had just begun thinking about it and were still working out the numbers. As you can probably guess from the title of this article, we went ahead and did it.
So, here’s why. Part of our hesitation was that we plan on being out of our house in less than two years and it would take about two and a half to earn the closing costs back with the saved interest. I think Financial Samurai hit the nail on the head in the comments of that original post when he asked what % we were sure that we would be moving in the next two years. And the truth of the matter is that we hadn’t planned on living in the house longer than 4 or 5 years and here we are going on 6 years. So, yes we plan on moving, but there is a chance that we will end up not moving. More importantly, I think we can earn back those closing costs a lot quicker by using the saved interest money to pay down other, higher interest, debt. If we’re paying off debt at 14%, we’re saving quite a bit each month and that will add up fast.
We did a little bit better on the interest than I had thought. Originally, I had estimated that we’d get about 4.375%, but we actually got in at 4.25%. Every little bit helps. Of course, the downside is that will end up paying a bit more than I had anticipated in closing costs. Which isn’t great, but overall, the math is still very favorable to us. We also reduced our monthly mortgage payment by about $130 or so. That’s a pretty good chunk of change that can go towards our other, higher interest, debt. We’ve got a few more pieces of paperwork to turn in and an official assessment to get before we can truly seal the deal, but all of that shouldn’t have any effect on the turnout. I’m hoping that we can have it all finished up and we can be paying the lower mortgage payment sometime around October or November.
What about you guys? Any of you taking advantage of the low rates to refinance your mortgages?