Sunday, March 11, 2012

Think of the Savings: Our Refinance (Part 2)

Do you ever have those days when you think it's another day? Last week I thought it was Thursday or Friday on a Tuesday. Throw in a bit of Daylight Savings Time and it's more than fitting to share my Friday's Fancies post on a Sunday.

This week's Friday's Sunday's Fancies is a fun one because I'm finally sharing how much we saved by refinancing :)

By lowering our interest rate from 4.875% to 4%, our required monthly payment is $142 less! With fees of $1,850, that means the refi will pay for itself in 13 months. We have no plans to move in the next 13 months, so the refi made sense/cents :)

[A quick word on fees vs. closing costs. Closing costs will actually be higher than the refinancing fees. Fees include items like the appraisal, recording fee, application fee, and title insurance. Closing costs include those same items as well as property tax, prepaid interest, and principal payments, as applicable.]

More importantly, we're going to save a truckload of dough in the long run! Even if we only made the required monthly payments, our savings are about $51,000!

That's pretty impressive, but we were already paying $100 more towards principal each month. With the 4.875% rate, that resulted in savings of about $34,000. So for a more apples to apples comparison, I calculated how much would be saved by paying that same amount each month. In essence, $236 in additional principal payments with the 4% rate.

Are you ready? This is big. Huge!

Almost $63,000!!!

Or $97,000 in savings when you compare the 4.875% minimum payment to the 4% minimum payment plus $236!

My jaw dropped....

So, what are we going to do with all this extra money? Something really responsible like saving for retirement, future kiddos' educations, donating to our favorite charities, and buying a new fridge when our 1980's model finally dies.

But wait a second? Isn't Friday's Fancies about having a little fun and dreaming big? Yes. So what would I (not John) like to do with the savings if those grown up financial goals were already covered?

Travel! I have the travel bug and haven't been outside of the States since our honeymoon. I could go for a trip to Europe or even the West Coast right about now.

Pastry school! I would love to take off work and perfect my buttercream frosting skills.

Quincy iPad case

Buy an iPad and a corresponding Jess LC iPad case! I'm not a very techy person, so it doesn't have to be the iPad 3.

How about you? What are your big dreams at the moment?

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  1. Cathy- Tell John to stop being to practical and live a little for TODAY!!

    It is fun to have money and save for all these future things- but don't spend your whole life waiting for the time when you have enough money to travl or buy something you want for fun or do somethiing you want to do-

    Use this tool to plan your next trip to Europe:

    Then talk to Rick Steves about a budget trip to Europe and pack you bags!- you are not getting younger! You can be in Paris in 9 horus, 30 min and only $780.!!! It's only $700 to Madrid!
    You can't affod NOT to travel while you can!

  2. ...and who taught us to be so grown up and responsible already!? We are still so young and have soo much of the world to see!
    Go travel! Live life!


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