Bozzlife: Striking while the iron is hot!
This isn't going to be an overly long post due to the fact that some of the nodes appear to be acting up today. I am not sure this will even post and I don't like the idea of having to type it up more than once.
Over dinner at my in-laws house the other day we started talking about the idea of refinancing our home.
My wife and I have been living there for about four years now and I feel like we got a pretty decent rate when we signed up for our mortgage at 3.875%.
One of the good things about the pandemic is the fact that interest rates have fallen pretty significantly. The numbers I am currently seeing would potentially put us in the 2.75% range with is very good.
Since my wife and I didn't find this house until we were in our 40's, with a thirty year mortgage, that leaves us having the house paid off by the time we are in our 70's. Personally, I'm not too fond of that thought. Even though our home is an investment that has actually appreciated in value quite significantly in the past five years, I still don't want to be paying on it until I am 70.
We actually pay a little more than our minimum monthly payment right now, so that 70 year old mark is probably a little high.
My goal is to look for a twenty year mortgage in the 2.75% interest range. I think that would put our monthly payment at just about $10 to $20 more than our minimum payment right now. With the extra that I pay on the mortgage anyway, that would hopefully leave us with a fully owned house at 15 or so years.
The other thing I need to take into account is that fact that my wife and I don't necessarily see ourselves living in this house for the next 30 years. Perhaps not even the next fifteen years.
It is a beautiful house in a great neighborhood, but it has a lot of stairs. As my wife and I get older, we have to be thinking about our mobility in the later years. My wife has also been talking about down-sizing for the past couple of months as well.
Seemingly, now would be a fantastic time to sell with the estimated price of our house being about $75,000 more than we paid for it. The problem is, there are so many people buying houses right now, that the inventory isn't available for all of the potential buyers. I am friends with several people in the housing business and their comments are "if you put it on the market, be ready to find a place to go, because your house will sell".
Are you in a position where you are taking advantage of these great rates right now?
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I think we have been lucky to live through relatively low interest rates. I did not get a mortgage until I was in my 40's as we had inherited a house. We needed the money to build our current home. That will not be paid off for a while yet if we had just paid the standard amount, but we have over-paid and have plans that may help us pay off the rest sooner. We are lucky in that respect. Prices have gone up a lot here due to the London commuter belt expanding, but if we wanted to move then property is expensive elsewhere, but there are areas of the UK where it is a lot cheaper than here.
Some people move abroad for a cheaper lifestyle, but that is not something we are looking to do.
I know in a lot of countries it is more common to rent than own a home. In the UK people want to own their home.
Hope you can find something that works for you.
Thanks, I appreciate that. I got some preliminary numbers back and it looks like we will probably just keep doing what we have been doing. I have to discuss it with @mrsbozz first of course. Personally, I would like to own a place with a bit more land, but as I get older that is just more I have to take care of, so it is definitely a trade off.
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My parents downsized to an apartment some time ago as they did not want stairs and it is less to maintain. My mum is happy with her small garden as she can still grow things. It may be just the two of us in our house fairly soon, but I am not keen to move. I'd prefer to pay someone else to fix things these days. If we can pay off the mortgage then we will have more money to play with for things like repairs.
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That is a really good thought. We haven't ruled out the idea of just bagging it all and moving to a townhouse or an apartment in one of the bigger cities either. Chances are we will stay where we are for the time being. We still have time before we need to really start worrying about too much. I hope anyway.
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First of all, I wish you some good mobility for the next 30 and more years. So that no stairs are any problem to you.
Thank you, I appreciate that!
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That's a very smart decision to refinance and have a strategy to pay more on the principal. Just a little extra per month can shave years off a mortgage! Merry Christmas to you both.
After talking about it a bit, we eventually decided to hold off. I am going to write a post about it today I think. You have a Merry Christmas as well!
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