Background– I have lived in this house for 22 years as of next week. The original house mortgage was at the interest rate of 9.99%.  This mortgage was sold and re-sold so many times that I lost count. The last company that we ended up with was called “OCWEN”. When interest rates headed down in 2007, we decided to try and lower our interest rate.  At that time, we were told, by the mortgage company, that the only way we would qualify for a lower interest rate was to allow our mortgage to become 3 months behind.  I did some checking and because of my previous bankruptcy, the fact that I was a stay at home mom, and Matt work history of less than 5 years, it would be very difficult for us to qualify for a regular mortgage/refinance without a significant cost of $3 to 5 thousand dollars. So we did allow our mortgage to get  90 days behind and were able to lower the rate to 5.99% with a whole new mortgage of 30 years. This has turned out to be a costly mistake.  As you know interest rates have dropped significantly again in 2010, however our credit showed a 90 day past due on the mortgage so we were stuck in a not the best mortgage.

Now to the start of the process, we had decided that once we were able to get out of consumer debt except for our mortgage that we would have a significantly higher chance to qualify for a re-finance or new mortgage. I have been watching our credit scores over the past year and had a goal of  attempting a re-finance in January 2016. For some reason, or in my opinion, God’s timing, a piece of mail caught my attention the first of May. This was an advertisement for re-financing at a rate of 3.5% and it stated we had already qualified. After some quick checks on the company on the internet, I decided to give them a call. My honest thought was that there is almost nothing worse than Ocwen where you spend 10 to 20 minutes a month trying to pay your bill.  I was pleasantly surprised to learn that it was true, we did qualify and we started the process.  On Friday, the process was completed at least for the most part when we received an wire transfer of most of the equity that we had built up over the years.  We are still waiting on our escrow money from Ocwen. I am not going to say it is completely finished until this is received. One other piece of information to keep in mind as you read the numbers is that we did build an 800 square foot addition to the house which is currently our master bedroom suite. We did not finance this addition so most of the equity was gain by this 3 year project.

Numbers-
The new interest rate is 3.85%(a drop of greater than 2%), on a conventional  mortgage.  The mortgage term is 15 years, which is down from 24 years that were left on our current mortgage. One of the biggest surprises was the appraisal value of our house which came in at 140,000. .  A decision that we made to withdrawal 20% of equity is probably not one that everyone will agree with. However for us, it has allowed us to have a complete reset of our budget.  A final change of plan that occurred during this process, was our very apparent need to purchase a new van. After prayer and number crunching we decided  to use some of the equity as a down payment which allowed us to achieve a manageable payment on a very nice family van.

My plan is to share our new budget that will start July 1st in addition to  making some updates to my yearly goals/monthly goals during this  next week. I hope you will stay around to watch this chance for us to position ourselves in a much more stable position in regards to our budget and savings.