We just finalized our refinance on our 6.0% mortgage. As much as we would have liked to go to a 15-year note (per Dave Ramsey’s advice), we felt more comfortable with the 30-year. Paying down on a 15 year note would obviously save us a ton of interest money and build equity faster, but the savings we gain (about $425/month) will be put to good use.
This is part of HARP and we re-financed with our current lender (a Credit Union). Overall it was a very smooth process and if you’re in a position where you are underwater in your home, I urge you to look into the program.
Remaining DebtsYes, I know the blog is titled ‘We got outta debt’, but that’s referring to our non-mortgage debt.
Home Equity Loan (HELl)
We did a cash out HEL(l) loan back in 2007 to consolidate some credit card debt and do some much needed home repairs. (This was before we ‘saw the light’). We definitely needed the new windows and saw the rising value of the home as a piggy bank. Lesson learned. That was just before the housing bubble and values went back down.
With our new Refi, we went from the 6.0% to 4.125% 30-year fixed rate. The $425 a month savings we have will help us accelerate paying off the Equity Loan (by this point you get the HELL idea, right?) by adding it to our 250/month payment. This means we shave off about 5 years from our payoff.
After we finish with this payoff, we’ll have the chance to continue down the Baby Steps by either adding more to our Retirement account or starting to pay down the Mortgage faster
What about you? What would you do with an additional $675 per month?