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Finally I'm Refinancing the Mortgage

October 11th, 2008 at 11:23 pm

After 6 years, my divorce is finalized and I am able to move forward with a refinance since I am now listed as sole owner of the property on the deed. It has been a rough ride, but the outcome was worth it. That's not to say that with a little cooperation from the ex...it could have been accomplished many years ago...Oh well!

Anyhow, the rate on the current 30-yr FHA mortgage is 8.5%. I've paid 7 years on that mortgage. A few weeks ago, I met with the mortgage loan officer so that he could do some paperwork and a credit check on me. I was a bit upset to find out that my FICO score was only 719. But all in all, the rating must have been good enough to qualify me for a 5% rate. He told me that I should lock in that rate, just in case rates increase. I'm happy I did because rates haven't been that low since!

For a few years I was wondering if I could handle a 15 yr. mortgage or whether it would make money too tight. So I inquired about reducing the term to 15 years and after doing some calculations, he told me that my money payment would be less than with the 30 yr mortgage! I was so happy because really I will be going from the 22 years that I would have left on the previous mortgage to the new 15 yr. term
saving an additional 7 years, not to mention the interest savings!!
So settlement is scheduled for the end of October.

I will have some extra money each month once this new mortgage kicks in. I have a few ideas for this "found" money by paying towards the principal on the remaining loans I have which include:

Car loan 3.9% ~ $4900. balance
Student loan 3.0% ~ $12,687.43

What would you do? Maybe I should just add it to the principal on the mortgage, but at the same time I would like to pay off my car loan earlier. I don't have any CC debt except for the 0% offers listed in the sidebar.

Thanks in advance for any suggestions and have a great evening!!

Posted in Budgeting, Mortgage | 6 Comments »

6 Responses to “Finally I'm Refinancing the Mortgage ”

  1. gamecock43 Says:
    October 12th, 2008 at 12:04 am 1223769871
    1223769871

    I say pay off the car loan. That will help your credit score. Excellent job, glad its worked out for you.

  2. SingleGuyMoney Says:
    October 12th, 2008 at 04:07 am 1223784421
    1223784421

    I vote for paying off the car loan. Once the car loan is gone, I would then focus on the student loan. Once those two are gone, I would then throw additional money towards the mortgage principal. Congrats on the refi to a much lower rate and lower term!!

  3. PauletteGoddard Says:
    October 12th, 2008 at 06:08 am 1223791739
    1223791739

    Congratulations on the sweet rate and timing of your refinance! When you cut your rate and your amortization period and your payment all at once it's the best time to refi!

  4. fern Says:
    October 12th, 2008 at 01:03 pm 1223816588
    1223816588

    The refinance deal sounds great. I would use the extra $ toward paying off the car loan, which is nearly a full percentage point higher rate than the student loan, plus the balance is lower so paying it off will give you a real sense of accomplishment.

  5. Ima saver Says:
    October 12th, 2008 at 03:11 pm 1223824296
    1223824296

    I agree, get the car paid off first!! Good going!!

  6. monkeymama Says:
    October 12th, 2008 at 03:33 pm 1223825582
    1223825582

    Agree - car first, then student loan.

    I'd evaluate retirement savings after that, before I'd put more to the mortgage.

    Sounds great!!!

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