It’s Monday – let’s talk about money honey. moolah. benjamins. greenbacks. dough. skins. bones.
Let’s talk about our situation with money. Jeremy works at a sales position…and with most sales positions there is the salary and then the commission. It’s the companies way of keeping things moving – giving the sales guy some motivation. And the company usually expects a certain amount of sales…duh. Which in turn means that sales guys can generally estimate how much they are gonna make at any given point if they hit their goal. My darling boyfriend, being the overachiever that he is, has always hit or exceeded his goals. So I say that to preface the fact that in our old house, we knew that we could live comfortably with only his salary – and his commission was for paying off past debts, renovating, and then fun stuff (like vacations to Dominican Republic).
When we bought this new fancy dancy whale of a home, we knew that it would require us to still contribute a little over at the old house (since it was a lease-purchase like we explained in this old post) and that we would depend more on Jeremy’s salary AND commission. AND that I would need to bring in a little each month to keep us afloat. Basically we are saying outloud with a megaphone – hello, we are housepoor. And that’s okay because we chose it going into this situation.
Some folks ask – What do you mean, you are broke?! like broke broke?
To which I reply – we make enough to cover our bills, put food on the table, tithe and celebrate special occasions – but we don’t contribute on a monthly basis to a savings account for Will’s college, for emergency savings (we have a small fund already in savings but it’s nothing major) or a retirement fund beyond Jeremy’s work. We do purchase some things for our home with a strict budget – only because it helps feed this blog which in turn makes us a little money. a very very very little bit of money.
I am telling you all this to not just keep it real…although I do love to do that on occassion. I am telling you all this because I want to emphasis what an impact our decision to refinance is having on our lives. We are saving over $220 a month!
Now that you know the punchline – here’s our story –
When we bought this foreclosure, we knew we were getting a great deal based on the size of the home and the size of the lot. Granted things are different in different areas of the country (or Australia – Howdy Mates!) so it’s hard to compare anything…so don’t try. We do live out in the country. Not the burbs. The country. I have to drive at least thirty minutes to get to the nearest Target. SOooo….we bought our 6000+ square foot home with the five acre lot for less than $300K.
The type of loan we used was a government program called an FHA 30 year fixed. The interest rate was 5.25% and our monthly payment was $2293. This payment included the principal and interest, property tax, homeowners insurance, and mortgage insurance premium (aka MIP – which basically backs the loan in case you default on your mortgage – I think it’s called private mortgage insurance or PMI for other types of loans).
So the first thing we did was ask for a reassessment on the property tax. You see, the tax people had our house assessed at a $370,000 value…and were taxing appropriately. But we didn’t pay $370K. So Jeremy went down to the county’s tax assessor’s office and they changed it according to our sales contract…and he also applied for homestead exemption…all in all, for two very simple things – we are probably gonna save $50 – $100 each month (starting in May) because of the decrease.
Then we started researching programs to refinance. Different companies do different programs. For example, our local bank Wells Fargo would have cost us $8K more than the program we chose – so it’s important to do your research to find the best fit for you and your situation. We ended up finding a program for FHA loans through New American Funding called a FHA streamline refinance program. It’s a no/minimal documentation program with no appraisal needed. It’s main objective is to get us FHA-ers into a lower interest rate…thus making it a simple rate refinance. Long term – saves us money.
So after a bunch of paper signing with the notary (who bonded with Jer over talks of video gaming),
(it was a grand time – don’t let them tell you otherwise. And yes, I am no longer ashamed to ask random people to take their photos – even if all we are documenting is “sign, initial, sign, date”…or giddy smiling during a self-portrait.)
With our new paperwork officially done, we have worked our way into the same FHA 30 year fixed type loan…but this time with a 3.75% interest rate (that’s a 1.5% decrease) making our new payment $2,071 per month (a $222 decrease) which is expected to drop even less when our property tax reassessment becomes effective in May.
But it’s gotta cost something, right?! Well, sure. But to avoid all the extra details I will just cut to the chase…our old payoff for the house was $280,657 and now the new loan amount is $281,386 (that’s a $729 amount that they rolled into the loan total). Which means that if we chose to save our $222 that we saved on a monthly basis and put it toward the principal – we could be back at our old payoff in four months.
And the real reward? Well, besides saving $222 each month plus more come May – is the long run amount. Estimated roughly at about $80K. Here’s my math:
- OLD PLAN: 30 years x 12 payments x $2293 = $825,480
- NEW PLAN: 30 years x 12 payments x $2071 = $745,560
- DIFFERENCE: Estimated savings over life of loan = $79,920
All you math whizzes and loan officers and refinance gurus don’t correct me or quiz me please, this is my best rough estimate.
The point is this…we refinanced. We saved money on this dream home of ours. and now I’m off to buy some shoes. kidding. only a little 🙂
Anyone else refinance lately? Penny for your thoughts!
p.s. HOLY FREAKING HAIRY MOLEY. You guys put Bower Power in the finals over there at the Homies. IN TWO CATEGORIES! Do you know what that means? It’s BIG. It’s like putting a Drag Queen in the Miss America Pageant…and with your help, I could actually place in the top three…spanx and all. I beg, I plead, I wish on stars & airplanes in the night sky that you pretty pretty please cast a vote for me. (yes, it requires a little registration but they won’t send you any junk)….Click Here….and Click Here…and even if I don’t place – well, I count each and every one of those votes as a dream come true.
We’re thinking about doing this too… do you know if you had to pay all of the closing fees again?
Also, consider yourself lucky that you’re 30 minutes from the closest Target. I live out in the sticks… but they’ve dropped a mall pretty close by & it’s dangerous. I’m sure I would be saving a LOT more if I didn’t get drawn into Target like twice a week!
We refinanced just last week. We were able to go from 5.5% to 3.75% and save about 100 bucks a month on our mortgage while also taking some out of equity for a few home improvement projects (hell0 brand spanking new appliances!). The interests rates right now are so great that everyone should be looking into refinances. Congrats on yours and all of your moolah savings!
Haha…target is such an addiction isn’t it?!?
You’ll have to call about closing cost details…
xo kb
We just refinanced from a 5.625 loan to 3.8 percent 15 year loan and we are saving almost 200.00 a month too. Everyone should do it, or at least look into it.
We are all house poor with the economy being the way it is. And people keep spending and only hurting themselves. Thank you for your honesty.
We are all in the same boat…it is just that most people refuse to admit it. You are an inspiration, Katie. Hold your head up. You were so smart to refinance. there is a reason I like you so much.
You keep it real.
B.
Katie! I love reading your blog but have never commented before. But I HAD to today because we refinanced last month and it totally blew me away just how much we will save! We are in a much smaller house than you guys, so our goal was to make a lot more headway on our current loan so when we do decide to upgrade we have that much more equity to take with us. We refi’ed from a 30 year, 5.75% to a 15 year, 3.25% and our payment only went up $60! Which doesn’t sound like much, but if you look at the overall payments, it basically cuts them in LESS THAN HALF and we pay 5x (no lie) MORE principal per month than we were! Seriously! Best part is our current mortgage holder was running a special for current customers (of 3+ years of good payments) to refi for free! Double score!
I just wanted to let you know there are many others out here just as excited about it. Have a great Monday!
Thank you for sharing your story. I think you guys made a great decision to invest in that house, it is beautiful. We are in a area of the country where house prices are great (Omaha, NE) and we jumped at the opportunity to get a 3 BD/2 bath in a great neighborhood. We are a tad house poor as well but we are frugal to begin with do it isn’t a problem. It think attitude has a lot to do with it. Have a good week Katie B. 🙂
Thanks for the informative post Katie. I voted for you in both categories again and I was eating bacon for breakfast while I voted! I am pretty sure that is a sign! Good Luck
I love that you talk about money and are real about it! Thank you.
Can I offer you unsolicited financial advice? You guys really should work on saving for your retirement as a priority because it cannot be financed (Will’s education can) and you will not know what physical or emotional shape you will be in to work. You also don’t know how long you will live (could be 100!) and you don’t know what medical insurance looks like (what if you need expensive assisted living or surgery/med costs not covered) Not to mention powerful compound interest! My DH and I are 29 and 34 — I’m a SAHM (and i also want/need baby #2!!) — and we have almost $120K in retirement. Our goal is to retire around 50-55 with $4 or $5 million. We’ve only been seriously contributing for the last 5 years but we give every last cent to our retirement accounts because it is that important. We can also borrow money from or IRAs if need be so I don’t feel like it is in a lock box. We do live well under our means but we still have student loan debt, a new car, home, etc. Since our ROI on our retirement accounts is over 8%, we don’t give any extra money to our home loan (what if we lost our house or the value decreased – we would lose that money!) but we do pay extra on student loan debt b/c the interest rate is almost 7% and the minimal payment can be tough if we ever are unable to make the same income.
Just my 2 cents! We just meet so many young couples who aren’t saving as much as they could/should. I don’t think society really promotes retirement savings and offers projections so I just felt the need to bring it up.
Otherwise, I LOVE your blog and LOVE your writing style. I actually am terrible at decorating (and honestly, I’m too frugal to spend money on some things!) but your friendly and bubbly writing keeps me coming back (plus Will is ADORABLE).
Thanks for the story! Things like this are always good to know about. Joe and I haven’t even started to house hunt but it’s good to have this info in the back of our minds!
We refinanced when Wells Fargo had a no-closing cost refinance and dropped our payment by almost $600. We are continuing to pay the same amount and now instead of paying off the house in 15 more yrs, we’ll have it paid off in 6.
I just read every word that you typed out but the only thing I can remember is SIX THOUSAND SQUARE FEET!!!!! I knew your house was big, but SIX THOUSAND!
That’s the same kind of set up I’d like in a future house, extra land, not in a suburb, must be nice!
That was an interesting post due to the fact that not to many people talk “money” realistically on their blog. Makes me realize how little I know in the world of (big-kid) finance.
That is great for you all Katie! Any little extra helps! Just FYI we started a 529 college plan for our son when he was about 5 months old and we just put in $50 a month. But you can invest it into anything you want (mutual funds or other types of investments) and it grows tax free. You can get them lots of places. Also we are in the beginning stages of refinancing too but we are hoptin to cut our rate AND cut our time into a 15 year mortgage. I would rather have less time than the money. LOL
hoping…no hoptin LOL
Yay for saving money! You are just like so many other people that own homes these days, so it’s refreshing to read someone being so honest about their financial situation when it comes to their home.
Do you mind me asking what paperwork you had to submit to see if you qualified for the streamline? We did an FHA refinance about two years ago—getting us from a 6.5 (the going rate when we bought in 07) to a 4.75, but getting down into the 3s would be nice! I’m just trying to figure out if it would be worth doing another refi only because we have some credit card debt, which makes our credit rating good, but not stellar.
Ann
We bought our house at the top of the market four years ago. We tried to sell, but it’s now worth less than we paid {but more than we owe} 🙂 and instead of selling at a loss we decided to refinance. We’re saving almost $200 a month and it only cost about $500 out of pocket.
We used the bank that held the previous mortgage so we thought it would be easier. It was actually kind of a huge headache. They’re a very large national bank. I had to resend papers several times, they didn’t communicate details, deadlines, etc.
We have a few rental properties and we plan to refinance those, too, but we’re going to look at local banks. It was definitely worth the savings, but I would shop around to find the best deal for you.
Voted! Your blog always makes my day, and your transparency in your writing is admirable. Thanks for sharing your life with us! 🙂
We’re also in the middle of a refinance and we’re going to save $250 a month!! Pa-DOW!!!!!!!
Thanks for being willing to talk openly about money. I think part of what landed this country in the economic mess we’re in is that people aren’t willing to talk honestly about their personal finances and what they can and cannot afford. The best way to get back on track is for us all to take a look at our bank accounts and live well within them, and you are setting a great example for that!
I voted, Katie! Thanks for keepin’ it real!
Congrats on the refi! We just put in a call to our mortgage broker about refinancing this weekend. Maybe opening up to your blog with this topic was a sign of good things to come for us! 😉
That’s so great for your family! We refinanced a few months ago at the same interest rate as you guys, and we’re saving about $140/month which has made a huge difference for us in helping to pay off some bills. I couldn’t believe the thousands we’d be saving on the total payments in the long-term!
wow! home prices sure do vary depending on where you are. we live in Canada and in a major city, downtown, and our house was around the same cost and is like MAYBE the size of your garage. But it’s our garage and we love it. 🙂
I also read that 6,00 square feet…YIKES! Truly…keep it real Katie…there has to be many rooms that you never even go into with that much space. Gosh….I understand why there is dust on the floors. Who could keep that all dusted. BIG SPACES!!!
Do you shut the rooms unused off so you don’t have to heat them? Keep it real and tell us what your utility bills are like in a 6,000 foot house. Would be interesting to know as I speak from having a 1,700 square foot cape. And I think my bills are high. Just curious about gas or oil heating bills. AC bills too.
Think you are great and happy for you that you have the beautiful house.
B.
Congratulations… that’s a great savings.
I’m going to get all up in your bidness for a sec. It may be something you’ve already discovered for yourself… but here goes. I work in an assessor’s office in GA. Although each county does things differently, there are certain laws that are statewide. Since you bought your house in 2011 and it was a foreclosure, I’m assuming you paid a lot less for it than it’s fair market value.
If that’s the case, state law says that the lower sales price is your taxable value for 2012. Make sure that’s the case. But… in 2013 it will go back to it’s fair market value. If you feel like that is too high, you need to file a return in your county stating what you think the property is worth. Also…. because that value will like go up in 2013, your mortgage will need to re-adjust to compensate for the change in property taxes…. so when you get your assessment notice, be sure to notify your mortgage company THEN so you aren’t caught at the end of the year having to make up the difference.
If you have any other questions, shoot me an email. I’d be glad to help you however I can. 😉
Katie – We refinanced two weeks ago to 30yr. fixed at 3.875%. Cost us about $800 added on to the loan, but we’re saving $125/mo..
Have you thought about having the PMI taken off? We use Wells Fargo and if your house appraises for a certain percentage over what you owe they will remove the PMI. Since we bought our home in foreclosure and updated it,it appraised for way more than we owed. They send someone to appraise it and you have to pay for it (around $300) but it shaved $200 off our monthly payment. You can claim the updates you have done for increase in appraisal value… like your bathroom updates, new carpeting, paint, landscaping, etc.
PS. On my way to vote for you now!
Thank you for keeping it real! I know that a lot of people find financial stuff awkward, but I appreciate your honesty. My husband and I have committed to live on his salary so that I can stay home with our two girls. I feel so blessed to be able to do this, but it doesn’t leave much for a project budget. That’s why I love your blog; you seem genuinely PROUD to score a good deal and redo your house on a budget. So many DIY blogs I’ve read redo whole rooms at a time and fill them with things from Pottery Barn, Anthropology, etc… And while beautiful, that just isn’t realistic for me. I love that you gather things over time, and change them to suit you and your house. So thank you, for keeping it real, and usually keeping it cheap 🙂
Holy Moly that is a major savings! We just refinanced, but we only saved $50 a month…however our house payment is only $740 a month. While I would love to have your house, I can not afford your payment, so I guess I will celebrate my much smaller $50 savings since it comes with a much smaller monthly payment (and much smaller house). Congratulations!
Holy Smokes!! We are in the throes of refinancing as well. I’d love to have your new 3.75% rate; that’s awesome. We’re (still) in Jersey and in a teeny tiny townhouse that we pay too much for, mainly because of the insanely high property taxes :(. I’d much rather live in the country down south, but that’s cause I’m a southern girl at heart 🙂 Congrats on the great deal!!
I think it’s great that you are honest about your situation. With the uncertain economy people need to be realistic about their finances; we see more and more the importance of an emergency fund, savings, retirement accounts, etc. People should buy houses they can afford and not have to worry about where the money should come from should unexpected needs arise (and they always do). While a big house is nice, it is not a necessity.
Just food for thought:
We re-financed recently from a 30 year mortgage (we were 5 years in) to a 20 year mortgage. Our mortgage actually went up even though the interest rate went down but for a little more each month we can have our house paid off by the time that we will have kids in college (and our goal is to pay it off in 15 years) and we will be saving so much money in the long run.
Longtime reader, first time commenter…
My wife and I were thinking about dropping our starter home and buying up, especially since we could afford the hit on our current home given how much we would save on the next one. We were dealing in the stay-in-the-next-house-the-rest-of-your-lives territory, lots of bedrooms and bathrooms and mother-in-law suites and extra space.
Long story short, a complicated pregnancy pushed us to wait another year (moving was too stressful to throw in with the mix). So we took the house off the market and painted a nursery.
In the meantime, though, I too wandered down to Wells Fargo and started talking re-fi. (This was Fall 2010). They immediately countered that, at that time, they weren’t doing re-fis for anything that had been on the MLS in the past twelve months. We wound up doing a re-fi with a small community bank, went from a 5.75% 30-year fixed mortgage to a 3.6% 15-year fixed. Our payment increased by about $75/mo, but we’re paying off principle like nobody’s business.
At the end of the day, when we decide to jump back in the market, we’ll be even better positioned to buy up because of how much equity we’ve gained on our current mortgage. And, at least in North Carolina, the housing market has yet to really get back on its feet, so the opportunities are definitely still out there.
Katie – great job on the refi – it can make a huge difference! We’re in the midst of a refi right now ourselves. Going from a 30 yr fixed at 5.999 to a 30 yr fixed at 3.999! That’s a huge difference in our interest payments and should shave a couple hundred off our monthly payment.
Good luck with the Homies!!
We are big fans of the 15 year fixed…way to go James!
And you other folks – remember that you can still pay down your principal at any time…even if it’s only $100 more each month, it could knock off years of your mortgage payment 🙂
xo – kb
Sorry, my tangent got a little off topic 🙂 It’s just refreshing to “meet” someone who is open about money and living within their means. Congrats on the refi!
We just refinanced, too!! 3.75% for the win!
Love this post Katie…too bad here in southern Ca it’s IMPOSSIBLE to refi if your house is upside down..hence..ours. Not anyone can just refi (regardless if you have steller credit and more than enough money to make the new payment) , I’ve found that out the hard way the past 3 times I’ve tried…urggg…be thankful you were willing to do that…because every girl needs a another pair of shoes 🙂
Yup – there are several rooms that I have rarely been in. And the dust is unreal. The little dust bunnies are breeding in this house 🙂
xo – kb
Katie, it’s the keeping it real and open that makes you so vote-able. You answer the questions that polite company don’t ask, without the necessity of asking. It’s refreshing and helpful. You bet you have my vote, whether it’s The Homies, or Bacon Queen. With the right running mate, I’d even cast my vote for Katie Bower, first female President of the US. And under that administration, I’ve always kinda wanted to head up the FBI. Just sayin.
My boyfriend just refinanced his house not to long ago and he went from having a $650 payment a month down to $300. Of course, his house only had 50k left on it so he didn’t have to refinance a huge amount but still every penny counts.
You guys got a great deal on your house! I found a home I want that is 6000 sq ft with 20 acres and they want 300k. The prob is the house isn’t finished and would probably need another 25 to 50k just to move in. 🙁
Wow, thanks for keeping it real, not many people would put out there the exact amount of their largest bill! But I agree with a previous commenter that we are in this is why we are in this situation. We are looking at a refi this summer, want to pay off a couple things first.
That is fantastic! We actually did just refinance at the end of Feb, so we’re saving a good amount too. We did the same FHA Streamline type refi and we came to around the same calculated savings over the term of our loan… certainly feels amazing knowing just a few signed papers does so much! Your home is lovely- Thank you for sharing your journey and all the details!
We attempted to refinance but because we don’t have an FHA or Fannie/Freddie backed loan, we are unable to refinance. If anyone has any refinancing tips for use with conventional loans, I would appreaciate it 🙂
Nice to hear about your refinancing. My husband and I are looking into it now. We have a 15 year loan and could possibly drop our rate by about 1%. We still need to speak with someone about the closing costs/etc to see if it’s worth it because this isn’t a long term house for us.
Funny you mention shoes….the day we signed papers for our house, I bought shoes on the way to my husband’s (then fiance’s) apartment because 1.) this house was a BIG DEAL 2.) they were cute and 3.) they were a size ten and on CLEARANCE 4.) A gift card paid for half of them. I still tell people to this day (a year later) that they are my “I bought a house” shoes! 🙂
It’s great to see your honesty and that even though you have this big fancy house, you are admitting to being house poor (even though you got the house for a steal). We live on one income as well, but based on what you said your mortgage payment alone is, much less than you all. We just found out our mortgage payment is going up b/c we are in the negative in escrow b/c our county taxes went up by like $900 b/c the previous yrs were based on the previous owners who got mega exemptions!! I am furious and scared at the same time b/c it is like $200 more a month and we really dont need that! We have a 30 yr fixed FHA loan as well at 5.25%. Our current payment is only $795- really affordable for our almost 2000 sf home in Buffalo. I dont know if we can refinance or not. We dont have savings or even an emergency fund. It’s hard to save when most of your money goes to mortgage, bills and food and not much else. We are slowly working on it, hoping nothing major happens. Any extra money we are putting into fixing up our home (kitchen is being revamped as we speak). That is why I am happy to have found your blog as well as YHL to help me DIY as much as possible on a low low budget and still have my home look fabulous.
Wow, your story sounds almost identical to ours, numbers not exact, but close. We live catty-corner across the country from you – near Seattle. We bought our first house three years ago, then refinanced a year ago last fall. We also saved over $200/month which really helped in the budget. We have a VA loan, and our refinance couldn’t’ve been easier. We also didn’t need to have it reappraised (good thing, the house is definitely not worth what we paid). We bought at the high end of our ability, knowing I’d go back to work when the kiddos were in school. Things have worked out comfortably, and we love where we live. Thanks for sharing!
Way to go Bowers! Thank you so much for opening up your lives to us and keepin it real. That’s why you’re so loved! We refinanced a year ago so not sure if it would make sense so soon, but I would LOVE to get down to that rate!
Voted for ya Katie girl! And it looked like you were in 3 categories, not 2, unless I read wrong. Either way, I voted for ya in every category you were in! Good luck!
Yes! We just did the same thing and are saving over $200/month as well! Isn’t such a good feeling? Since ours is an FHA loan too, we had to do a couple things to the house before it could go through (paint the garage floor and paint a section of the house where there was some pealing paint). The kicker was that it was outdoor work in November in Buffalo and…. I was due with our first baby… any day! But, saving $200+/month = TOTALLY WORTH IT!!
Also, we do the bi-weekly payments to our mortgage too which is huge too! I think it takes like 7 years off a 30 year mortgage.
Congrats to you! Now, go buy those shoes 🙂
Love your honesty about things Katie! Glad you were able to save yourselves some cash by refinancing!
Such a great post! Amazing house for the money…a wise investment I think! Good job on the refi.
Hey Katie – I did my re-fi through Wells Fargo, mostly because they held my original mortgage. I did it a few months back (October-ish?) so I didn’t get quite as low of a rate as you, but did do it with no fees. Nothing. Nada. Zip! My payment is around a grand, and I was able to cut about 100 bucks off in the end. Of course, the city just did a HUGE reassesment, and somehow just about everyone’s property values went up? So my taxes are going up, but not quite as much as what I saved on the re-fi. 😉
While I’m thinking about it – did anyone ever win the Lowe’s Gift Card from your desk post? I’ve looked back and never saw an update. 😉
Love this post! We’re going through this process right now & really appreciate the tips/thoughts/notes on experience! Also voted for you for BOTH! Go KB & Bower Power!
Well said Tara! Well said!
It’s so great that you were able to refinance. We’re in the middle of refinancing as well. But we aren’t all house poor as you say. That’s a huge assumption, and I wonder what makes you feel that way.
In the first year that we had our house we were paying an extra $50 a month on our principle and cut 2 years off our 15 year fixed. Granted we paid next to nothing for our house, but *anything* paid toward principle helps like crazy! Thanks for talking about this subject. I love that you have no problem taking on the “tough” stuff…that’s why I read 🙂
I’ve been reading your blog for a while and I love it, keep up the great work 🙂
I do have to ask – why the need for a 6000 square foot house? I’m in Canada and we really have to wonder when we see Americans struggling with debt yet living in enormous houses. It just doesn’t make any sense to me, and I’d like to understand it. (having said that, there’s plenty of Canadians with the same mindset, so I don’t want to generalize too much)
My husband and I both grew up with well educated, loving parents who had good incomes and with siblings in a 1200 square foot house. Right now we live in a 715 square foot house! We plan on finishing up our basement so we can stay here for a couple more years but we love it. And we plan on having our first baby here – in this (tiny) house!
Wouldn’t it make a lot more sense to live in a more modest house (heck, even a 3000 square foot house is HUGE) and have money at the end of the day? You could actually travel, shop, save money for college and retirement and still have plenty of space (and actually USE the space that you do have).
Wow, while reading this post I felt like I was re-reading the email I just sent my husband. Monday mornings are great for going over the weekend expenses and making sure the week is in order. This is our year to pay things down and allow for extra spending money for vacations and “extras”. We are also refinancing right now and saving a very close amount to what you are saving. Feels great to get the exact same “things” for less money, doesn’t it?!
House Broke: I get that. But, it’s our hobby, creativity, and the place we are most comfortable and spend a lot of our time together as a family. 😉
Seriously. I feel you on the Target thing. I used to live less than 5 minutes away from TWO Targets, and now I live at least 20 minutes away from one. It definitely saves us money, but I so miss Target!!
We are in the process of doing this now too!! Going from a 30yr to a 15 year… with NO closing costs!! huzzah! 😀 With the new interest rate, and the fact that my man already pays about $300 extra a month, our monthly payment will only go up about $100, but in a few months we’ll actually be saving money when he pays off the home equity loan AND the house will be PAID for in about 11 more years! Yay for re-financing!
p.s. I don’t know HOW you live so far from Target! I would DIE 😉
By the way, GA real estate must be super cheap….here is a local listing in WV (one of the poorest states) to show what you’d get here for that kind of money. By the way, the majority of people here could not afford this house!
http://www.4wvproperty.com/cgi-bin/ream/rea.pl
Vote – done! Good luck! We re-financed last year – dropped our house payment by $200 a month. Ahhhh…..
I’m with Gloria. Gee whiz, I had no idea it was that big!
Uh…that’s what she said?
I also just wanted to echo a few others and say thanks for keeping it real! It’s refreshing!
I gotcha back girlfriend! I voted for you. 🙂 We refinanced our house 10 years ago for 15 years at a super cheap interest rate and paid a little extra each month, not much just around $20.00 extra a month. Our house will be paid for in 4 years. 🙂
Just want to say I love your blog so much, and that I am pimping you out for votes in the Homies! Team Bower!!!!
Thanks for sharing this info!! My husband and I are looking into refinancing but I am so scared to go with a company that I am not familiar with (i.e. a big bank). How did you decide who to go with and how did you confirm that they were legit??
Thanks!!
Katie
Thanks so much for sharing! We are in the process of buying a new house and even though we are under contract now, we’re having MEGA second thoughts since it would make us house poor. And house poor without a lot of growing room or even a significant investment opportunity.
We are going to go with the FHA 30 year for that same rate – which is KILLER. I was amazed at what a different it made then some of the other ones we were looking at.
Congrats on refinancing!
That is really great advice Annalisa, thanks! I know you were telling Katie but I will take it too and share this with my husband. 🙂
Thanks for your honesty Katie! We live in California, bought a 1959 1,400 square foot house last year and are paying just as much as you. We have a great interest rate so we don’t need to refinance (it’s just the crazy high cost of living here) but I know how paying a lot on a house can make you feel. It’s a beautiful house and it’s yours forever!
Congrats! That gives me some food for thought. I bought 2 years ago at 5%.
Slightly off topic… do you mind saying where you went/stayed in the Dominican Republic? My fiance and I are trying to choose between the Dom and Jamaica and want to stay at least half the time in an all-inclusive – but we can’t make up our minds!
🙂
This is so great. Thank you for posting this. My husband is finishing up school and we’re looking at buying when he’s done and this was just the information we need. Thank you, Katie.
PS I also am quite fond of your blog. 🙂 I’m off to vote.
We’re refinancing right now, too. We’ll save about $150 each month, which is just awesome, especially considering that baby #2 will be here next month! And they rolled all of our closing costs into it, so we didn’t have to pay anything out-of-pocket.
Wow. You just described our situation to a T. From the one primary income plus the other whatever-you-can-make income, to the housepoor concept. No college savings for the little one. Not much for us either. Everything you guys are doing – That’s us. Only difference is that my wife is the breadwinner.
We’ve been working on the refinance options and it looks like we are down to our last ditch effort. We’ve talked to several companies and all said the same thing: there’s nothing they can do for us. It’s incredibly frustrating. Unfortunately for us, we do not have an FHA loan. That fact has made this process about impossible to take advantage of. Our current rate is at 6.5%. Barf. We’re also in an apartment building, which makes it still more complicated for the lenders.
Cheers to buying in 2007 with little more than a heart beat and a signature, just minutes before the sky would fall.
JUST TO MAKE YOU FEEL BETTER……dust bunnies breed in 1,700 sq. foot houses too. Damn them anyway. I just don’t understand how they breed so fast.
Just saying…..
Have a great day Katie…and I voted for you!!!
B.
I thought I felt like an adult when we closed on our first house and moved in. But I REALLY felt like an adult when we refinanced!
We ended up paying a bit upfront at the closing, but we end up saving a couple hundred bucks a month. Interest rates are super low right now so it is a great idea to look into refinancing for all of you homeowners out there–even if you bought as recently as early 2011!
Love your blog! Congrats on saving so much on a refinance! That’s quite a good chunk of change. My question is less to do with that and more to do with living out in the country. My husband and I are looking at homes now – I want one with some land – not much just an acre or two. But in order to find something affordable we have to look outside the city. That means a 30 minute drive to a Target – or at least a 20 minute drive to a grocery store. I think I’m okay with it – but I am really afraid of feeling isolated. I’ve worked for the last 20 years and have a 20 year old daughter (that is in college) and a 17 year old son in high school… and wait for it…a 12 week old baby boy!! Yes – I’m starting all over! With this little monkey I am choosing to stay home. This means a type of isolation that I haven’t dealt with in my adult life – add to it the idea of living way out of the city and I am skeeerd. How do you deal with it? How to you stay connected?
In my heart I know it’s what I want – but I need to properly deal with the steps to get there!
OH PS – I know what you mean in dealing with the financial change in the winds. I made more than 1/2 of our income (above 6 figures) – and we lived in a $124k house that is almost paid off. We are looking to buy in the $500k price range but due to saving all of my income over the past few years (well, almost all – except for vacations and trips to target) we have about $300k to put down. That house payment makes me want to panic!!!
First, good for you on the savings! Right now is a great time for re-fi’s (so I hear).
Second, OMG, 6000sq ft for under $300k! I live in the SF Bay Area, and I’m drooling. 😛
Katie, this is so timely! We are doing the streamline thingie right now too. And yes, thingie is a technical term.
What happened with the MIP? Did the five year clock start again at zero? and did they roll 50% of the MIP into the loan like they did initially? Did you have to pay points to get 3.75%?
But jeez – 30 minutes from Target.
Voted! I love your blog, and how real you are- and this post is a perfect example.
I have been thinking of refinancing to save myself a little bit of money every month but didn’t want to have to pay some of the insane fees associated with refinancing. This gives me new hope that maybe I can find something with minimal fees and hopefully an awesome interest rate like you got! 3.75% that sounds fantastic! A lot better than the 5% I’m paying now!
This is true! When we bought our home it automatically appraised for 20% more than it was selling for- we have never had to pay mortgage insurance! (Yay!) I bet with all the updates you have done in that house KB (particularly outside and in the basement!), it probably would be worth the $$ to do an appraisal and have that removed!
First I must say that pic of Will beside his little pool is Adorable!!!
Refinancing is a great option, and lots of banks are helping home-owners out with that right now. We were going to refinance last year, but when we did the math on what it would cost us on closing costs, our savings would not recoup that cost for 5 years. We intend to move ASAP. So it just didn’t make sense in our situation.
It gets tricky when you are juggling numbers, just be sure (for all of your readers) that you are informed before you start the process. Do your homework and do the math. There are lots of online calculators out there. 🙂 Hope that helps someone else!
I work in the morgage industry (secondary marketing..just a fancy word for the person who “locks in” the rate you chose with an investor) – rates are very low right now, you did right by refinancing 🙂
On another note…I just voted for you, and it says you are currently in the lead with 536 votes. Runner up to you has 380 votes. That’s a 156 vote difference! Woot Woot!
Registered and voted. Good luck!
Oh and awesome job on your refi!! I bet you are so excited to have a little breathing room!
Congrats on the savings! I love this post! I love how you shared the numbers, I’m a nerd for that kind of stuff. Refinancing can be a great way to save, but like you said, people need to be careful and research it first! We just bought a house for $35k on several acres, also out in the boonies of Georgia (45 minutes from a Target!!!! I feel your pain haha) Certainly not anyway near as nice as yours! But it’s home and it needs a lot of love and my little family has plenty to give it. Our payment is $500, but as with you, I filed homestead, so hopefully in May it’ll be even lower!
You should totally get a referral bonus from New American! I just called them to start the refinance process – I had NO idea we could refinance this early in our loan (we closed about a year ago on our FHA loan). It looks like we should be able to refinance from 4.875 to 3.75, with $1,600 added to the loan, which would save us about $240 per month. Not sure if we’re going this direction yet, but thanks for the heads up!!
We refinanced back in November… which was grand because it saved me from having to make a December house payment. Merry Christmas to me!! Seriously, we changed from our 30 year loan with a 10 year arm at 4.75% to a 15 year fixed loan at 3.75%. Our montly payment actually went up by $200/month, but our house will be PAID OFF when I turn 45 years old. Unbelievable to me!! We couldn’t quite swing the 15 year loan when we bought the house 2 years ago, but it is working now. Love reading your blog – it has become one of my absolute favorites!!
We just did this as well – it’s saving us about $200 a month and dropped out interest rate about 3/4 of a percent (we had a pretty kick butt rate going in) . This streamlined refi program is great and so easy!
We are currently refinancing going from an FHA 30 year fixed w/ private mortgage insurance (only had 3% down) to an 80/20 combination loan at 3.875% for 80% of the loan over 30 years and 4.375% for 20% of the loan over 15 years. We are going to save a little over $200 a month!! It’s so exciting! And if the house appraises high enough (which we think it will) we will qualify for a home equity line of credit to finish our basement! Very life changing because we have a ranch style house.
Time to go vote for you, Homie. 🙂
Wow, thanks for being so honest and up front about the $$$$. No one ever wants to talk numbers.
And wow, you’re right about trying to compare properties. It’s amazing how vast the differences are based on location. Because boy oh boy, if you had that kinda of land and home here…your house would be worth AT LEAST a cool 3-4 mill. And that’s low ball.
I’ve always admired your home and love what you are doing with it!!
Yup, me and my hubby just refinanced right before Christmas and are also saving ~$200/month. One more number to include in your math equation is to subtract the amount of interest you paid on your first mortgage (since you already paid it and aren’t getting that back). That’s why it’s best to refinance within the first few years of ownership. So your total savings would be ~$10k-$20k less, but $60k is still really impressive! All the paperwork is a little intimidating but good for you on pulling the trigger and diving in head first!
that’s great!!!
i can’t tell, but did you include the $2293 x 12 months you already paid into the loan last year in the figures above? we did something like this also a while back, but we forgot that we already had paid a lot into it for a few years and didn’t subtract that from the savings so we thought it was more savings at first, but after looking, not as much since we didn’t subtract that…we still saved but not as much as you guys did, so that is great!
Thanks for posting this! Gave me the kickstart I needed to look into it for our family! Not sure if you get anything for referring New American, but I just filled out an application with them for more info because of your post, so I hope you do!!
How long have you owned your home?
We also have an FHA loan (first time homebuyers one). We originally wanted to go through my hubby’s credit union cos they had awesome mortgage rate (3.5%) but they didnt do FHA. Now we’re at Wells Fargo with 4.75% which aint bad, but could be better. When we talked to the credit union they said “oh see ya in 5 years when you refinance” as like a nice thing ( i guess?) So we were assuming it took x amount of years until you were able to refinance. Is that true? We’ll only be in our house a year this June.
I just voted for you!
Dude. You are currently (as of 2:20 pm central time) in the lead for Best Home Design Blog! As you should be!
Knock on wood I did NOT jinx you. Knock on wood.
I’ve read some of the concerns about your 6,000 square foot house. I think folks forget that you and Jeremy both work out of the home, that you want more than just 1 child and I get the impression that you’ll home school. I think 6,000 feet would be perfect for all that activity. You’ll have the luxury of not having to play/work/school/eat all in the same room. Plus – you’ll never need to pay for storage for all the things you’re not using at the moment!
thats awesome ! we just refinanced in january–also saving around $200 a month. It feels good not to be so “house poor” and actually do some home projects 🙂
Whoa. That totally blows my bacon. Of course, that could change in a moments notice…but still…consider me amazed.
xo – kb
We closed last February…so one year.
xo – kb
Nope – we don’t get anything outta it – just wanted to share all the details if it helped!
xo – kb
Yup – I included that already 🙂
xo – kb
Oh shoot – I forgot to calculate that…oh well, rough estimates 🙂
xo – kb
Awesome! So glad it could help!
xo – kb
We loved it – of course, I was pregnant at the time and ultra sensitive to smells so it was tough to find the right room. In the end, I think we paid a couple hundred extra after we arrived and got a bridal suite – AMAZEBALLS.
xo – kb
It’s not easy to stay connected but I am very close to my family – so that helps and finding the right church home has helped too. I also am looking into playgroups – you know with other moms – so that I can get my daily words in 🙂
xo – kb
Thanks for being so honest with money/financing! We’re in the middle of purchasing our first home and it’s a lot to go through. Love the blog 🙂
Well, as far as I know – MIP isn’t a five year thing, it lasts the life of the loan. So I don’t think your question applies to an FHA…but I could be wrong. I might go ask Jer.
xo – kb
You make me giggle.
Yep we did indeed just refinance – well back in November, that’s “just” right?!?!? Our goal for 2011 was to get out of debt, except our house and refi to a 15 year and we did BOTH!!!! Now we just need to SAVE SAVE SAVE so we can put an addition on our tiny little shack and I can love it as much as you love your dream home. I guess it was the wrong time to end my job and start an in-home daycare when we need to be saving. Darn it anyways!!! 🙂
Thanks for making my smile in your funny post Katie – and ps we’re including you in our prayers for baby making. We’re in your same boat, get buns in our ovens already God!!
I’m not exactly sure – Jer handled all that. If you are interested, it might be worth a phone call to the folks over at the place that handled our refinance.
xo – kb
Thanks girl – I’ll do that if I have any questions!
xo – kb
I don’t think they can take the MPI off…it’s different terms with our type of loan. I could be wrong though. I’ll ask Jer.
xo – kb
oh heavens knows a big house is not always nice either 🙂
I never saw us in a house with this much room…but I’m not one to turn down a good deal either 🙂
xo – kb
haha…it’s a deal 🙂
xo – kb
You inspired me! We’re looking into refinancing now. We’ve got a FHA 30 yr mortgage at 5% Fixed but I want to explore the options. How did you find the right company? I’ve made an inquiry with the one you used but I was wanting to price a few companies. Anyone got any ideas? I’ve linked my email/website. If you used a company you liked, could you holler at me? Thanks!!
Well, it was sortof a weird situation. When we first saw the house it was listed at 3500 square feet…on the large side of our desired range…we were looking for something around 3000 (that’s what our last house was)…but the real kick in the pants was the fact that it has 5 acres in a neighborhood on a culdesac with a creek under 300K. Even out here, that was hard to find. So we knew that it was a good deal. To me it wasn’t so much about the house than the lot. Does that make sense?
xo – kb
Yay for a an Aussie shout out!! We live in Melbourne Australia, which is the Capital city for the state of Victoria…. we own what I though was a decent size house but it is like a drop in the ocean in comparison to your house size… seriously, I could only dream!!
Hahaha, jealous much!!
Number 1,567 why I love to read your blog. I’m a stay at home mom, and we chose to buy a house at the max of our budget so I could have lots of babies, and then we wouldn’t have to move in 2 years. (I still only have 1 baby) We are house poor, and yet I sit and drool at house blogs and/or design magazines every day. I love to decorate…and have what feels like $20 to spend each month 🙂 Hallelujah for Ikea…and for the power of my husband’s Grandpa’s basement! I love you, your honesty, and your blog. Thanks for sharing this.
Agreed! We bought in June 2007 and it was unbelievable. They gave us a 200k+ loan just bc my husband was finishing medical school and had a contract for residency (mind you, residents don’t make much money). He didn’t even have income when we closed (I was on a teachers salary). Sucks… it’s not an FHA loan (I think our lendor, Suntrust, still ‘owns’ the loan), and we can’t find anyone that can do anything for us. BOOO to a 6.125% rate
I think she already is!
I visited the website you indicated in your blog and the mortgage calculator is incorrect. We are in the process of doing a refi with our CU and when I plug in my numbers they are way different. New America funding’s calculator says my loan at 3.75 for $198,000 would be $553 and my CU calculation has it at $926. The problem with the New America calculation shows that the majority of the money goes to principal when we know for probably at least 20 years the interest portion of the payment is significantly higher than the principal portion of the payment. This is true for any type of loan that is tied to time- car loans are a good example.
I hope the information published on this site is not misleading people who are naive about borrowing.
We need to refinance too. Interest rates were low when we bought our house, but they’re even lower now. Thanks for the push! Going to vote now too!
I know you asked Katie and not me, but I’m in the same situation. We live 20 minutes away from the nearest grocery store and – wait for it – 45 minutes from the closest Target, 1 hour away from the decent Target. I grew up in a city and lived in the suburbs for a few years and it has been extremely difficult for me to be so far out. I work in a very populated area, but it’s only twice a week and I go absolutely crazy on the weekends. We have a baby now so that helps, but it’s really rough being so far out- I’m sure it would be easier if we made some more friends out here, but there’s at least a 30 year age difference between me and most the people in our neighborhood.
Which company has the no closing costs? That’s what we’re looking into. Thanks!
Katie, thanks so much for sharing your refinance situation. I’m madly googling the FHA streamline refinance program and hoping we have a “happy” ending like yours in a few months!
Just filled out my info on that website! We need to refinance! *crossing fingers, toes and eyes* Thanks for the link!
We live 2 hours from a Target…. 🙁
This was such a brilliant idea. And all the money that it will save you. Off to vote for you. You totally deserve to win. Keep my fingers crossed for you.
I am in the same situation. My husband and moved back to his home town, two hours away from a populated city. Two hours to Sams, Costco, TJ Maxx, Home Goods, Michaels, Hob Lob, Lowes, you name it. We have a Wal-Mart, HomeDepot and SafeWay in our town, much everything else is purchased via the internet.
I struggled for the first year we lived here, we moved 1320 miles from my family and friends. It took time, I have made a few friends, many are much older than us, and we have now adopted children. It has grown on me. I will say that we save money by having to plan purchases and the face that impulse buying takes the internet or a long drive. I know that rural living is not for everyone, so many people move out here, to be gone in a few months.
Our PMI on our first home, 10 yrs ago applied until 20% of the loan was paid off. We were basically told if we had 20% to put down they would waive the PMI. I am not sure if it still applies now like that or not.
Thank you so much for not only calling yourself out for being “HousePoor” but going into detail and helping other people out, not only with this post but with others… with your thrifting techniques and what not…. I woukd love to see more posts like this, how you save money on baby items, groceries, etc….
On my way to vote or you!
Look into HARP. It’s an extension of the govt home affordability act. If you are up to date on your payments but underwater you may qualify. As of march 17 it has an unlimited loan to value ratio! It’s a great opportunity for higher interest rates.
We’re in the same boat – we bought about 3 years ago with a conventional loan. our rate is okay as it is, but high in comparison to current market rates! have you spoken with your current lender? we’ve heard some will do an FHA-like streamline refinance for existing customers with good payment history – and then you don’t have to get a new appraisal.
Just voted. You’re #1!!!!
Yes – that is usually how PMI works, right? Unfortunately FHA program doesn’t work that way – we can always refinance down the road when we have more paid off!
xo – kb
Love your blog, especially because you post 5 days a week! I voted for you in both categories.
Hi, Katie. Thanks for having the guts to talk about money, which everyone wants to know about, but most bloggers won’t talk about! haha
We are purchasing our own foreclosure, and soon to find ourselves a lot more “house poor” as well. Do you and Jeremy just save up for any renovations or are you just planning on doing them down the road? We have some debt that will be paid off in the next few years which will help tremendously, but I was just curious how you manage in the present.
Aimee
You have my vote, Katie!
Aww thanks Tallulah! That means way more than you’ll ever know!
xo – kb
This space is not completely renovated…like for example, we need to have our house trim and facia boards removed and repaired…and then painted. We need new gutters especially on the back because the little ones up right now are pulled away from the house and allow water to come into the hardwoods. We have elaborate rigs to alleviate problems but we are trying to save money while still maintaining some sanity. Like we aren’t gonna get new gutters and not do Christmas. So we just save when we can and when we find good deals we make it happen. It helps to not have any major debts except the house and 1 car. And the blog needs projects to keep it running so any extra bit of income here helps too.
xo – kb
Aww thanks Asia! You know I always wonder if people notice how frequently bloggers post…
xo – kb
Hey Katie, great post, thanks for sharing so much! I live in Australia & our economy, house prices & loans maybe different to the U.S. but the concept of refinancing is universal! We just completed almost the same process. We had a standard loan, which was an amalgamation of different loans we’ve had over the 12yrs we’ve owned our house. But, just like you we have simply refinanced for a better rate (oh & borrowed a bit extra) but our repayments are way less than before. We are going to keep paying the higher amount, which will reduce our loan quicker, but now we have the flexibility if something happens we can drop them right back & not have to change anything. All so good to have money in your own pocket rather than the banks … and they are still making a profit. WIN>WIN.
Absolutely, without a doubt I notice! Especially if it’s one of my favourites. It’s so tough having to wait out that time between posts. I find it particularly difficult to wait if it’s a two (or more) part project post & you are waiting to see/hear/find out more.
In the process of refinancing as well :), we’re dropping our loan amount a full 2.5% by moving into a VA and saving quite a bit of dinero! Yay for low mortgage rates and hopefully they stick around!
G’Day from Australia…….
Yes Aussie properties prices are a joke but in saying this you could get a decent property in the country for a lot less than the city…. Of course nothing with charm or potential like your whale…..:)
Good on you for showing how you can work smarter not harder…
I recommend people also look at all their utilities as well. Getting rid of credit card debt b4 u do anything else…..
Also a tip is that if you get a daily coffee, donut buy lunch, a bottle of water a coke try to stop doing this for a week and then each time you would have spent those coins put them into a jar and examine how much the little things actually add up… If you can live without the little things keep putting the money you would have spent in a far and at end of month you will have money to either put on Mortgage or to give yourself a bigger treat/night out.
Quite different in the land down under, we have a changing interest rate loan which means that every month we wait for the announcement saying ‘don’t go up, don’t go up’.
We’ve just refinanced some extra debt (my uni fees, car loan) into our mortgage to tidy up our monthly bills. Its just having the discipline to still pay the extra that would have that portion paid off in a few years and not stretch it out over our 25yr mortgage.
Oh and the discipline to stay away from shoes.
Great job on the refinancing! We did it last year and it saved us a bundle since we were able to get rid of our PMI. With the current interest rates everyone should really check into it and your entry will definitely inspire a couple more to do it I’m sure 🙂 Everyone was so excited voting for you I went over and voted too – good luck!!
Thanks for keeping it real! Much appreciated.
1 vote for bower power 🙂
I am so glad things worked out for you!!
I just looked into the place you used but they aren’t available in or area (PA) bummer!!
We just tried to refinance with TD bank. We were at the Home Show here in Philly and they stopped us. We didn’t think we could refinance because we were only in our house for 2 years and the house prices in our area have already dropped. it turns out we were right because we weren’t able to get the loan. The people from TD bank that worked the home show pretty much lied and told us whatever they thought we needed to heard to apply. I’m guessing they got some kind of commission for getting people to apply at the home show. Now we are stuck paying for an appraisal. At the home show they told us that our house would only need to appraise for what we were asking for. It appraised for 10,000 more than the loan we need but they turned us down because they said they require 20% more. they also told us we wouldn’t be responsible for the appraisal unless we changed our minds and they told us there would be an FHA option. All of it turned out to be lies. I guess it’s on us for not seeing/getting it in writing. The whole thing was very upsetting
I agree with Megan. LOVE your honesty. You’re so gutsy to put it all out there, especially about money. It is so refreshing and appreciated!:)
Annalisa, while it is great to save, you can’t always guarantee an 8% return on your investments. If you can, I’d love to know where you have you money so I can put mine there too. I started my retirement account in 1998 and I am just now starting to recoup the money I lost when the market went down to 8,000 in ’07-’08. That maybe when you started saving and that is why yours is doing so well. It is just not guaranteed and I’ve never met anyone that could explain how to recoup that, even financial planners. When that time is lost, it is lost. My husband and I save a reasonable amount of our salary, but I am way more cynical about it now. The first decade of the 2000s are known as the “lost decade” in financial terms. So, imagine losing 10 years of that 8% return. It’s just too bad we can’t enjoy our money while we are younger!
Katie,
Did you vet this New American Funding through the FHA website? Just wanted to see how you made sure this was legit and not some fly-by-night company….When you decided to go with them, did they just work with the company who currently holds your mortgage to get it refinanced? Thanks for the info!
How did yall apply for homestead exemption? I thought that was for only people 65+?
How did yall get your tax adjusted to your sales price? Taxes are suppose to be on appraisal value I thought. We bought a foreclosure home too and only paid 60k but its appraised at 120k, but we are taxed on the 120k, so getting it down to the 60k would be AWESOME!
Curious because I want to see if I can do it too. Every penny helps! THANKS! Appreciate the answers
We refinanced as soon as Wells Fargo opened up the Harp 2 program and are saving $400 a month. Woot! This was our first step towards moving and making our townhouse a rental. I envy you your location; MD is a horrible place to try to buy a home as even the tiniest, oldest, nastiest homes top 300k. Where are my tiny violins?!
Congrats on being a finalist!
Congrats Katie!
My hubby and I decided to to a HARP refi – we dopped from 6.375% to 4% and saved roughly $178/month. We also owed for 26 more years, but managed to get it down to 20 years. With that said, we are probably going to roll the extra $178/month back in for additional principal payments to payoff our home sooner.
Yay for low interest rates!
Great Post, Katie. Congrats on getting the 3.75% rate. What a smart move you guys made. My husband and I just bought our first home with a FHA loan. We close the end of April so I guess we are not homeowners just yet.
Since we knew nothing about buying a house my husband started reading this blog: http://themortgagereports.com/ (I read DIY blogs, like yours, to decorate our house, my husband reads mortgage blogs so we can buy a house, hehehe)
Here is a post that explains MIP. Similar to PMI, for a 30 year fixed loan “annual MIP is automatically canceled once the loan reaches 78% loan-to-value and monthly MIP has been paid for at least 60 months.” Obviously, we should always check with our mortgage company to confirm this.
http://themortgagereports.com/7570/fha-mip-cancel
You got my vote in the Homies!! Congrats on your success.
Thank you so much for posting about this! The hubs and I are in the process of buying a home right now with an FHA loan and I really appreciate your candor about the pricing breakdown. We’re also looking in the country, although we’re looking around Charlottesville, VA and the bubble never really burst up here, despite what anyone says. The tiniest, shabbiest, brick-iest homes are in the low 3s. We’re having more luck in the country, but I admit that even with the foreclosure, my mouth almost bounced off my desk when I saw the price of your house. WHAAAAAAAAAAAA??? Amazing. That is so awesome, I am really happy that you guys have had this opportunity to snag this house. Fingers crossed that we’ll be able to say the same in a couple of weeks here!!
You mentioned that you guys weren’t currently contributing to a retirement fund beyond Jeremy’s work- does he have a company match? My company doesn’t currently do anything like that so I’ve been saving in a target retirement date roth IRA.
Yes, we readers notice. You have (for the last couple months) been my go-to blog. I read it first thing when I get up! (and may check throughout the day, just incase you did another). Thank you for being who you are without compromise … I love that!
Yes – they match up to 4% I believe.
xo – kb
aww thanks Ajantzi…I am always shocked when people say that they actually read. I guess I’m still in that “only my mom reads” mentality 🙂
xo – kb
Just voted for ya….hope you win.
I sure hope so, I might be a little bit on the jealous side but it would make me oh so happy too!! 🙂
We are actually signing paperwork tonight to refinance with an FHA loan. We’ve been in our house for 6 years and this will be our second time refinancing – the first time we got a home equity loan which we used to remodel our kitchen (seen here on Young House Love http://www.younghouselove.com/2010/02/reader-redesign-tile-for-miles/)
This time we are only saving $116 per month, but I also work part time (3 day week, then 4 day week). By going to all 4 day weeks those 2 extra days per month + the refinance really add up (over $300 per month).
I also do not contribute to my retirement – really don’t care since I have about 33 years to go!! Instead I put $50 per paycheck into my savings account. With a little boy who just turned two, I’d rather have that money accessible for expenses our family may currently need.
Aww thanks for your vote. It means so much to me!
xo – kb
Lux – you da bomb dot com! Thank you so much!
xo – kb
We notice! We also notice the content.. You always manage to mix it up!! Its not a “Monday-Baby post… Tuesday Giveaway Post… Wednesday-House post, etc..” type thing, I never know what to expect from you and I LOVE THAT!! That and your honesty are the reasons I read your blog!!!
Yay… Canada!! Where in Canada do you live? Im from Ontario
I’m totally an airhead – which is why I could never stick to a schedule like that 🙂
Glad you think its okay though!
xo – kb
Good for you guys! I spent the last few months looking at all the bills trying to come up with “creative” ways of reducing them! I cancelled our cable and bundled the TV with the phones and internet and saved $125/mo! I called the gas and electric companies and inquired about reducing our monthly budget payments, and guess what? another $230/mo reduction! I also cancelled magazines and book clubs so I would not impulsively buy buy buy!! 🙂 Little changes here and there add up on the bottom line! Good luck to you with your changes!
Way to go Elaine!
xo – kb
Voted for ya, Katie! I hope you win! We just love your blog and all you do!
Voted for you. Found you through YHL and check on you daily now. I just did the streamline too. 5.25% to 3.75%. I’m going to save $153 now and will save an additional $240 when the MIP falls off. Sucks that MIP increased since I bought in Jan 2010, but at least it is tax ductible (through 2012 anyway). They better vote to keep MIP tax deductible after 2012! Love your blog. Beautiful family and dreamy house.
We’ll also be refinancing! Although, for FHA loans, in June the prices of Insurance Premiums are going down again, so we’re waiting for that. Our original loan is at 6.75%, with monthly payment of $1,327 including the $70 or so for insurance. Our new quote for the Streamline is 4% with monthly payment being $1,065 including $160 for insurance (when you refinance your insurance almost doubles), but in June we’ll be able to get 4% with monthly payment being $985 including $80 for insurance. I cannot WAIT. The savings is INSANE! 🙂
Thanks so much for being open about money! I think it’s awesome to be able to compare how other young couples are navigating all this stuff. I share all our financial info on my blog in the hopes of generating more open discussion. We’re hoping to refinance this year too!
Aww thanks Laurie! And congrats on the refi! Way to save the moolah!
xo – kb
There are far too many posts to read to see if someone else suggested paying your mortgage weekly or bi-weekly instead of monthly. You can knock YEARS off your mortgage with that. Ours went from a 35 year mortgage to 29 years!
Holy crap that’s a good deal! Congrats!
Actually you are the first to mention it I believe but yes – we do that and it’s amazing how just a couple weeks can reduce the payoff in the long run!
Great suggestion!
xo – kb
This was such a helpful post, thanks! You mentioned that you guys manage on a single salary – but what about your photography business? If you haven’t done one already, I’d love to read a post about how you developed your business.
Hey Katie,
Just wondering if you guys are doing bi-monthly payments? You don’t pay anything extra, your payments are just split in half and paid every 2 weeks. It takes 7 years off the back end of your home loan. So, your 30 yr loan would actually be only 23 years with no extra outta pocket! My hubs and I just bought a foreclosure (8 months ago) AND expecting this June (girl!!). So I understand EXACTLY what you are going through doing projects bit by bit and how every penny counts.
Hope it helps! God bless.
Yes we do. It definitely works!
xo – kb
Hello Bower family. I work at New American Funding and can’t thank you enough for your blog. New American’s employee’s are awesome as we all care, we really do. We are consumer advocates, we look out for our clients, we care and we build long term relationships. Was great to see photo’s of you signing loan docs as we don’t always get the chance to meet face to face. So happy you got a loan when you did as rates are great. So….. Thanks for taking your time to share and congrats on your soon to be new addition to your family.
No thank you Chad! We are beyond thrilled with our new rate and we hope that others do their homework to find the best solution for their own lives!
xo – kb
Katie:
Love, love, love the china cabinet. You have truly inspired me to paint my cabinet which is just like the one that you purchased. I realized after seeing yours how ugly mine is (smile). Well, I can fix that!
I want you to know that I have been following your blog for several years but never posted to your comments. Sorry! You are so talented and fun. Your little Will is the same age as my Granddaughter. Children are so wonderful…especially Grandchildren.
We re-financed last September went from 5.5% to 3.25% and brought our payment down $300- we were shocked and so happy we went through with it. We were honestly being a little lazy and didn’t feel like doing the paper work at first, when my mom suggested it to us (she’s a realtor), after we found out what we could save I didn’t care if was 10 days worth of paper work!
Katie, we’re thinking of going with New American based on your recipes, but I checked hello and there were some very bad reviews. Are you happy with them?
Sorry, auto correct! I meant thati checked yelp
Well, we figure there are bad reviews with a lot of good companies. I just want to encourage everyone to read all of their paperwork and know exactly what they are getting into with any refinance!
xo – kb
We kinda did the opposite. We refinanced from a 30 yr to a 15 yr at a lower rate. Our payment increased $104 a month. But, over the life of the loan, we will save more than $200K in interest over the life of the loan.
We refinanced to a 15-year from a 30-year and are only paying a little less than $200 a month for it. Before we did that, we paid an extra mortgage payment a year – by taking a monthly payment, dividing it by 12, and adding that. By doing so, you can reduce a 30-year to a 19-year and not refinance. Amortization!
Hey Katie,
I know it’s a bit late but thank you so much for the shout out! All of the folks here at New American Funding saw the blog and were so proud that you mentioned us and that we were able to help you start on your adventure.
And to Kat above, unfortunately we do have some bad reviews on Yelp, but we also have great ones! Check out the filtered reviews (which sadly Yelp hides) and New American Funding on the BBB!
Sorry about that Katie! I did not see that Chad also commented thanking you! Well now you get a double thank!
I think it’s great that you are so open about your finances. I think financial illiteracy is a huge problem in our country. It seems parents aren’t doing a very good job teaching their kids about money; the best place for them to start would be at home by sharing their personal finances. Your PMI/MIP doesn’t “get” you anything so I would work on plowing any extra money back into your mortgage principle until you are allowed to drop it. Double money in your pocket (savings from no more PMI/MIP and BIG savings from less mortgage interest overall).
I find Dave Ramsey’s website (http://www.daveramsey.com/home/) very inspiring; we don’t have any debt other than our mortgage. I’ve never considered paying off our mortgage more than a few years early to be possible. But recently we refi-d from a 30 to a 15 year mortgage, and I am working on *seriously* ramping up extra princple payments. I really want to pay that sucka off in less than 10 years!!!! Wish us luck!
My jaw just dropped. I cannot believe you were able to buy that home for under 300k. Ath that square footage!!! That is A-MA-ZING. All of the sudden I think my family needs to move to a more affordable area.
We live in a very expensive vacation area in Northern California (Lake Tahoe), and you cannot really buy an empty 1/4 acre lot here for less then 200k.
Crazytown.
I don’t know if any of the other commenter said this, there are too many to read BUT, you might want to look into changing your payments from once a month to bi-weekly. Our mortgage was exactly $1000 a month, they split it into a bi-weekly payment of $500 and we’ll pay off our mortgage 6 years earlier and save over $70k in interest.
The biggest thing to remember is that not everyone will even qualify for a refinance, depending on your state. In mine, for example, you must have a certain amount of equity in the home first. Like Katie said, do your research before you start in on the process.
Yes – lots of folks recommend that and do it (including us)…so it is definitely worth looking into!
xo – kb
Hi Katie! I was wondering how you guys found out about this website (just searching online?). I would love to find a similar program (sadly, this one isn’t offered for homes in NJ)
Yup – googling 🙂
xo – kb
Hi Katie. Few more questions. We are currently looking at similar progams. We got 3 quotes in total and the most recent lender gave us a good faith estimate. Did you guys also get one? If so, did it list higher estimated settlement charges than what you paid at the end? You probably don’t even remember:) but I figured I’d try. Our GFE lists a pretty high estimated settlement charge but our lender is saying they will cover those costs. I’m just wondering if you had a simiar experience, but I know some fees really vary by state so it may be competely different in Georgia. Also, did you have to pay the first mortgage payment upfront or the first two? Just trying to get some comparisons from someone who went through a similar thing. Thanks! Oh and don’t worry, of course we are doing extra research and reading EVERY SINGLE LINE before we commit to or sign anything.
I think you are required by law to get a Good Faith estimate so yes, we did. Usually if it’s a good lender, the estimated settlement charges will be more than what is actually going to happen. For our refinance, we received a months mortgage payment ‘break’ and did not have to pay that upfront so it was like skipping a month. Hope this helps.
xo – kb
Hello Katie:
We just completed a refinance and our mortgage is now with the VA and a bank in the midwest. It took some time to complete the task and we will not do it again, especially through HARP which allowed the corrupted credit system to block us by allowing insidious entrapment data submitted by Wells Fargo. We could not be approved and they knew that would keep us chained to Wells Fargo’s schemes to drain our money for those greedy investors.
We are satisfied with our present arrangement.
Sincerely,
Michael