Let's Talk Finances
Refinancing
101
For many people in this country the Covid-19 pandemic was an unprecedented and daunting time. Many were out of work and really strapped for cash.
Thankfully, we are blessed with jobs that allow for us to work from home, so the transition was seamless.
We did do some furloughs at my job, so I found myself out of work for a total of 4 pay periods. In the grand scheme of things, that’s very mild!
This pandemic really reminded me of the age old, but often unrealistic finance tip of having 3 months of bill money in your savings. For us, that means about $10,000. This newly realized goal led me to a review of all my monthly expenses to see if there was anywhere we could trim fat and save more.
This post was sponsored by Diamond Bloggers. All opinions are my own.
It’s no secret that interest rates right now are at a record low. So I contacted my mortgage company to inquire about refinancing. 30 minute into that call, I was half way through the application process. My lender assured me it was a quick process, which wasn’t exactly correct but I digress. We don’t have a ton of equity just yet, so we aren’t looking to cash out, we just wanted to take advantage of a lower interest rate if we could. We were paying 5% interest and we would drop down to 3.625%. Saving us $50,000+ over the life of the loan. We will save even more if we continue making our extra monthly payments. The reduction in interest rate offers us instant gratification in roughly a $200 cheaper mortgage payment. We usually pay an additional $200-250 per month, so this will allow us to keep making our extra payment at the same price we are currently paying. *SCORE*
Warning: The Refinancing process is just as annoying as buying a home.
Lots of paperwork, lots of watching your credit score, and lots of evasive questions about your spending from underwriters. All in all, it wasn’t too bad. Due to the timing of our closing and everything just beginning to open up, the title company sent out a mobile notary for our closing. We signed a bunch of papers but overall it took less than an hour.
This is a big decisions as you are taking out a new loan. Here are a few things to consider:
- Compare how much you owe to how much your new loan amount will be. Having only been in our house 2 years we hadn’t made a huge dent in our note so the impact was minimal.
- Compare how many years you have left of paying vs starting a new term of 15-30 years.
- Access your plans for the next 6 months. Your spending will need to be put on freeze during the month or two of underwriting. So many sure you aren’t planning on taking out any other loans, spending, or even depositing large sums of money.
If it makes sense for your family, you should certainly consider refinancing! This is a wonderful time to shop low interest rates and almost anything can be done remotely (Docusign is your friend).
Have a great refinance story you want to share? Maybe you have the best lender on the planet? Tell me all about it in the comments!
A mobile notary came to our house and made the closing process super easy!
This is going to help so many people through the refinancing process. There’s so much you have to know, and it can be incredibly hard to navigate through it all.
I’m glad I could help. I had no idea it was just as involved as the original closing process.
This is such an awesome post, and it’s something I’ve been thinking about a lot- thank you so much for sharing!
If it makes sense for you, now is a great time to do it!
Having a great time reading this article, I know that refinancing is not easy but I am sure it will help a lot. Thank you!
Thank you for your comment!
Refinancing can be stressful but sometimes it’s the only option at least you have the choice of all these different places with different percentage.
Very true! We were lucky to have options.
We refinanced a couple of years ago and it dropped our mortgage by over $400. Plus the fees are already paid off and we owe less than we did when we started the process!
This is really great to hear! I’m hoping for similar results.
It may be hard but some people dont have any choice but refinancing but it is surely helpful. Thank you for sharing.
Thanks for reading 🙂 !
i have never had to refinance but these sound like some helpful tips. thanks for sharing.
I’m glad you enjoyed!!
Refinancing 101 is a good topic. We need it to know our financial freedom. Also, to reassess our expenses. Cool right? It’s a great topic to discuss at home and office.
It’s always good to re-evaluate your finances. I do it quarterly which is a bit much lol but yearly is a must do!
Saving this post for when I have my own home lol! Some good tips in here.
You will be ahead of the game!
So informative! This is such a thoughtful post, and will absolutely help so many people!
I hope it helps someone. Thanks for commenting Bennett!
This pandemic really put things in perspective for me as well including financially.
Same here!
I didn’t know the process to refinance included all of this. You definitely gave some good points to consider!
Glad I could Hep Jessica!!
Lots of great information! I’ve never refinanced but my husband and I have been thinking about it. Thanks for the info!
Now is a great time. Honestly I was afraid but it wasn’t too bad.
Thanks for this amazing concept, refinancing. Get a lot of new info here on this topic.
Thank you so much for your comment!
Refinancing is really good even my certain family members are thinking of it! I believe refinancing helps during these hard times…
It really does! And every bit of savings help right now.
I really need to change my mind about money. I’d be perfectly fine letting my husband or financial advisor deal with all things financing and money. I’m glad you guys were able to take advantage of this unique time!
Nothing wrong with letting him handle that if that’s his strength!