Thursday, January 12, 2012
Refinancing our mortgage
This week my husband and I refinanced our mortgage. It is such a relief. We have wanted to do it for sometime as we knew we could be getting a better interest rate and saving on fees, but with my husbands job all over the place we had to wait a bit.
The first thing I did when we decided to refinance was use a mortgage interest calculator and compare rates. I discovered some of the great deals out there and found that by negotiating and discussing things with my bank we were able to switch to a lower rate, stop all fees on our accounts and save a lot of money. It was really easy to do, but I had to be on my guard a little and say no.
One thing that surprised me was when the bank asked me if I wanted to borrow extra since our house valuation came back a lot higher than was necessary to refinance. The first thing that came out of my mouth was “Why?” I was then told about how I could use the ‘extra money’ I have sitting there and take a holiday, upgrade my car etc… I definitely did not want to do that. I know many others would have jumped at the opportunity, but my focus is getting rid of debt.
The next thing she asked was if we wanted interest only. No, I didn’t. Interest only means all your mortgage payments are only covering the interest on your loan. The amount you owe never changes because you are not paying anything towards it. I don’t recommend interest only mortgages for anyone.
We plan on continuing with our current payments so all the money we are ‘saving’ on a lower interest rate and no fees will work to pay off our loan much faster. Paying even $50 extra with each payment can save you thousands over the life of your loan.
My husband and I discussed the best way to set up our loan, make our money work for us and are aiming at getting our mortgage paid off asap. Our first step is to clear our personal loan and then roll those payments over to the mortgage as well.
Have you ever refinanced? Did the bank ask you all sorts of questions to try and make more money off you?