How we saved $30,000 with a $1000 investment

Yup, that seems like a lot, doesn’t it?  Must have been difficult, or lucky, right?  Nope.  It was really easy, and you may be able to do it, too.

We purchased our current home about 6 years ago, and our rate was actually pretty good for the time, 5.65% for 30 years.  It was the end of the housing boom, and we were pretty happy to upgrade our home and were able to sell our old one quickly.  It’s nothing extravagant, but one of the cheaper homes in a nice neighborhood.  The home was stuck in the 70’s, but that didn’t bother me, it just meant I could update everything to my taste, which we are slowly doing.

Aaaaaaand then the housing bubble burst.  I was doubly thankful we had made the move when we had.  We are in a wooded oasis in the middle of town.  We can walk to church and grocery store, and even to the hospital.  The kids and I even walked to the post office about a mile away.  Yet is it quiet.  And we were free from the toxins of our previous home (as much as you think sealing paint will fix a previous smoker’s home, it won’t.  Don’t buy it).  I heard on the news about lower interest rates, and refi, but didn’t take them very seriously.  After all, we had a great house at a great rate.

What pushed me over the edge?  Our bank sold our loan.  Our hometown bank, where we had all of our accounts and promised never to sell our loan…..sold our loan.  There was no disruption, we simply received our tax forms and escrow summaries and such from this other mortgage company.  Our direct deposit stayed the same.

But it was enough, I was annoyed.  I noodled about with Bankrate and discovered that rates really were good.  I still preferred to have our loan local….where I could call up and request information or stop by and make an extra payment.  Finally, another local bank advertised their loans in the local paper, and I made the call.  Why I didn’t look there before, I don’t know, as I have my free small business checking account there.

Our friendly bank agent gave us the good news.  We could pay *less* per month, and benefit from 3.3% from then on….and for only 20 years. We filled out the application, had an assessment done (which matched the tax assessment done last year, yay; but required taking pictures of the inside of our messy home without warning, boo), and waited.  An hour of signing and $1000 of closing costs later, we emerged with and immediate savings of $100 a month, plus 4 fewer years of mortgage, and a long term interest savings of $30,000.  Not too shabby for a phone call, a couple hours of work, and some patience.  We plan to still pay the payment we are accustomed to.  The extra $100 a month will cut our mortgage to about 16 years.

So I urge you to look around at the websites of your local banks and see what rates are.  Dig out your papers and remind yourself of your current rate.  If it is more than %1 different, seriously consider refinancing.  Rates are at record lows, and it is giving money away to not take advantage of them.


About Dawn

Dawn is a 40 something stay at home momprenuer with two homeschooled children.
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