Consolidation/Refinance (Part 2)

Part 1 was published quite some time ago.  Originally, Part 2 was intended to be a discussion of further refinancing my loans, into a couple of chunks, including possibly moving a portion of my big loan into a variable interest rate.  I abandoned that thought when I wasn’t happy about the rates SoFi would have offered me.

But here I am posting a Part 2, so I must have something to share.  Heck, I’ve got two somethings:

Mortgage Refinance

In my last post, I noted that I didn’t add much to my savings account this year. My goal had been to add $3,000.  Part of why this didn’t happen is that we refinanced our mortgage in July.  I got a couple of Zillow alerts that our estimated house value had gone up. Originally we put 5% down, so our interest rate was a (terrible) 5.25%.  Part of this is due to the fact that our house is a multi-family.  Because our house value has increased approximately $30,000 in the two years we’ve owned it (some due to improvements we’ve made and some due to the market), we now have 20% equity, and were able to refinance to a 3.5% rate for a 20 year loan.  I think our principal and interest payment went up by less than $10.  Paying off our mortgage 8 years earlier for a mere $10 a month? I’ll take it.  Our mortgage payment will go up a little bit more because of increases to our taxes and insurance premium, but those are unrelated to the refinance and would have happened anyway.  Our payment is still less than it was before we qualified for the homestead tax exemption.

Student Loan Refinance

Here we go again! I’m looking into refinancing my current 15 year loan (about 13 years left) to a 5 year.  Unlike my prior refinance and the mortgage refinance, where the monthly payment didn’t change all that much, if I do this my minimum payment will almost double.  In theory, I should be paying over $1,100 to my student loan every month, though my minimum payment is currently about $555.    The lowest possible rate I could get would be 1.95%.  That’s an awesome rate.  If I’m able to get that, I’d only be paying about $100 in interest every month.  Changing my minimum payment to (approximately) $1,050 will give me a lot less wiggle room, but I’m hoping it will provide some motivation to tighten my belt elsewhere (I’m looking at you, Amazon and work lunches).  I also only put two months of rent payments toward my loans this year–last year I did six.  I’m looking to put pretty much every rent payment toward my loans in 2017.  This should give me a bit of wiggle room in months where I wouldn’t otherwise put the full $1,100 toward my loan payments.

So hopefully this goes through and I’m able to start plowing through loan principal in what remains of the year and into 2017.  I’ve got some ambitious goals for 2017 that I’ll post about once I hit my big 2016 goal.
EDIT: Drafted this a while ago, but just getting around to publishing. I’ve been approved, and the payoff check should be getting sent any day now. More details in my next post, whenever that is.

2 thoughts on “Consolidation/Refinance (Part 2)

  1. Did you get the 1.95% rate? That’s phenomenal and definitely the lowest I’ve seen. If your plan is to pay off the loans, it definitely makes sense to go with a variable rate and the lowest term possible since both choices will lower your interest rate. You almost can’t go wrong, even in a rising interest rate environment like we’re in now, since you’ll have the biggest balance on the loans when you have the lowest rate. Once the interest rates rise past where you would have been had you chosen the fixed option, you’ll have such a small balance it won’t matter.

    Sounds like another debt-free JD here. I like what I’m reading.

    • Thanks for your comments! I did get the 1.95% rate, which is actually fixed. I’m hoping I’ll get most if not all of the interest I pay on the refinanced loan back, because they have an incentive for paying off early. Either way it’s nice to know that by just paying the minimums (which I’m not planning on doing), I’d be done within five years.

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