I’ve been keeping a HUGE secret!

Are you curious as to what it is?  

No, we didn’t win the lotto (don’t play), nor have we booked an exotic vacation (no money), nor are we debt free (yet) but what we did do today is HUGE!

Do you remember my quest to get the interest rates on our debts reduced/eliminated?  Dumb question for those of you who have been following Hubs and my journey as getting this accomplished was all I talked about for months on end.  Well, there was something much, much bigger that we had yet to address.  While the interest wasn’t terrible (or at least not compared to our credit card debt), what we were paying was still far too much.  So what is this thing?  Our mortgage!

Today I can finally share this secret that I have been keeping since late November.  Call it a combo of not wanting to jinx the refinancing or fear that I’d have to come back with my tail between my legs.  I just didn’t want to say anything about it until every last document was officially signed.  For anyone who has financed or even refinanced a house, you know how many different steps are involved.  We’ve had multiple approvals, of course, all with contingencies attached.  Proof of this, proof of that, sufficient appraisal, etc.  You know the drill.   The call came in on Tuesday that we were finally cleared to close today.  Even with that, tempted as I was to do so, I made myself hold off on sharing the details.

The highlight of the refinance is that we went from a 30-year mortgage of 4.5% (27+ years remaining), down to a 15-year mortgage at 3.25%.  When we took out our original loan, 4.5% was the going rate, even with credit scores in the high 700/low 800 range, depending on the different reporting agencies.  With interest rates being down, it made sense to do this.  Good thing we locked our rate in when we did since they have since increased.  Due to some delays (the holidays, trouble verifying my seasonal job, etc.), we did need to do a short extension to secure this.

I’m guessing that many of you are wondering if we took money out.  Yes and no.  Our goal remains to get out of debt, not add to it.  That being said, we did roll the closing cost into the refi.  We did prepay the appraisal fee of $525 and when all was said and done, do get a check back in the amount of $615 which we will receive next week.  We will also get our escrow back from our former lender.  That will be roughly $1,700.  While we could just turn around and throw it back at the mortgage, we will use it towards our consumer debt instead.  The faster we pay that off, the sooner we can start snowballing this new mortgage.  With a much lower interest rate, we will be in an excellent position to get it paid off much faster!  I, for one, cannot wait!

Did our payment go up?  With shortening the term, it did go up by just north of $400/month.  But now also with the lower interest rate, so much more is going towards the principle, it will be so worth it!

What does the increased payment mean for our goal of paying off $18,000 in 2018? Well, my goal is to still accomplish what we set out to do.  There may be some months where we pay more than $1500 and other months we pay less.  I am keeping my eye on the $18,000.  As to how we will pull this off, when we started this process, the tax reform was not yet passed.  While due to very irregular paychecks an exact impact is difficult to calculate, we will see an increase in our net pay.  That right there will help make up for some of our larger payment.  At some point in the year, should also see raises which will further help.  Even more significant, though, is our drive to get this done.

Am I worried about taking on an even bigger payment?  Yes and no to this question too.  Hubs and I are currently strategizing with what debt payoff would make the most significant impact.  The surgeon’s bill of $300/month is a must.   I had held off on paying that off in full not only because not only I hated to see the hit to our savings but also because I was waiting to see if we would need to give copies of our bank statements.  Oddly enough, they didn’t ask for them.  The other bill we are considering is the hospital of $177/month.  Paying off these two debts would give us our “cushion” back.  I would also like to pay off the $900 balance on our smallest credit card.  Although the minimum payment is only $35, I just want it gone!  With it also being tax season, we may wait until the “financial dust” settles and see where we stand there, too.

So, this is my excitement for the day.  My secret is finally out!