I’m back in CT from Nepal and my Everest Base Camp Trek. The trip was exciting yet tiring. I’m sorry for the lack of posts as I just arrived back on Sunday and I’m a wee bit jet lagged. Also, I ate something funny in Kathmandu that made me do a lot of “system downloads” to the toilet.
Here’s a picture from my Everest Base Camp Trek:
This week I called a mortgage broker to inquiry about refinancing my current mortgage situation which is as follows:
Mortgage 1: $135,800 @ 6.25%
Mortgage 2: $9,625 @ 8.375 %
I’ve managed to pay off a good chunk of my second mortgage in the past 18 months and I thought I inquiry about refinancing the first mortgage two a 15 year fixed rate while leaving the second mortgage as it because it will be paid off soon and there’s no sense in paying the re-finance costs. The mortgage broker took some information, ie personal info, credit information(no pull was done because I knew my credit scores), and current mortgage balances.
With the information I provided him, I can refinance to a 15 mortgage at 4.25%, which is great! However, it would be dependent on the assessment value of my townhouse. I would need to have my townhouse assessed at $165k or $170k so that my Loan to Value ratio is .80 or less. If not, I couldn’t probably end up paying Personal Mortgage Insurance (PMI).
With my current mortgage situation, the mortgage broker and I agreed it’s in my best interest to pay off my second mortgage completely and pay down my first mortgage to have a balance in the low $130’s. With the first mortgage balance in the low 130’s I’ll be able to comfortably able to hit the Loan to Value threshold so that I don’t have to pay PMI or sweat the assessment process to reveal whether my townhouse will earn the value I want it to.
With a conservative time table, I should have the second mortgage paid off definitely by the end of the year. If I tap into my “emergency fund” I could feasibly pay it off by the end of the summer. I’m going to monitor the interest rates and see how they perform if there’s an upward trend in the rates, obviously, I want to refinance as soon as possible.
With the second mortgage paid off, it’s going to eliminate my $280 monthly payments, which I could use towards additional payments on the first mortgage to lower the balance to the low $130’s.
It may have seem that I’ve jumped the gun to talk about refinancing, but I feel that it was worth the phone call to see where I stand and what actionable steps are needed on my part to get the lowest interest rates possible. In summary, here are the goals that I need to accomplish to refinance to a 15 year mortgage:
- Pay off my second mortgage completely
- Reduce my first mortgage balance to have an outstanding balance in the low $130’s