Pinching Pennies

Everything homeownership isn’t just paint colors and fabric swatches.  Sometimes there’s math involved.

For us, that math looks like this:

school loans + baby + Kristin working part-time + car dying = too much money going out + not enough coming in

So, in addition to cutting back unnecessary spending (lame), we looked into cutting back our non-discretionary expenses.  Which brings us to a few weeks ago…

A few weeks ago, Kristin’s brother Billy mentioned that mortgage interest rates had dropped, even since June 2010 when we bought our house.  We emailed our mortgage consultant and asked what he thought.  He said, if our house appraised high enough, we could save about $200 on our monthly payments by refinancing.  The appraiser was scheduled to come in ten days.  He warned us that the market was worse than it used to be, even a year ago, and that there was a good chance our house had decreased in value.

We spent the next week and a half madly trying to finish a few lingering projects to maximize our house value.  We’re talking staying-up-until-11pm (hey, that’s late for us) frantically painting and cutting wood.  Here are a few pictures:

We painted the doors in the living room Benjamin Moore’s White Chocolate (to match the trim).

We added moldings to the kitchen door that leads to the basement (we put that one off because the moldings had to be trimmed to a weird size).

There were a few more (e.g. framed out the porch door), but that’s all we caught on camera.  So the only question that remains is whether the appraiser decided our house was worth $8,000 more than we paid for it?

Well, despite the big dirt pile in the backyard that we call a someday patio thanks to all of our hard work, the house appraised for $5,000 more than our purchase price.  Still, we didn’t quite hit our magic number.  It looked like a refi will have to wait.  We thought we’d have to wait and try again – maybe after the patio is finished.

Then our mortgage consultant re-ran the numbers and came back with another proposal.  It wasn’t quite as attractive as the first, but still definitely worth going for.  In the revised proposal, we would still save $200 each month on our mortgage payment, but we would have to pay about $3,000 at closing (in advance mortgage payments, not closing costs).  Because it wasn’t costing us anything and we would earn that $3,000 back within about a year and a half ($200 x 15 months = $3,000), the refi was still a financially good move.

Unfortunately, we hit ANOTHER hurtle.  Our mortgage consultant’s revised proposal was based on Kristin’s full time salary, not her part-time salary.  Based on Kristin’s reduced income, we weren’t eligible for the revised refi proposal.  But our mortgage consultant was not deterred.  He knew that Kristin was planning to return to work full time in 2012, so he worked (way too hard) to get us an exception.

In the end, he worked it out.  That’s why we love our mortgage consultant – thanks Chris Smith at Trident Mortgage.  (No, he doesn’t even know we’re singing his praises on the world wide web- we just do it because he’s the best.)  We close on the refi tonight, thanks to his efforts and the support of his team!

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