Adventures in Refinancing

It all started a few weeks ago when our mortgage broker reached out to us and asked, "Have you guys given any more thought to refinancing? Numbers are really great right now."

Always open, we said, "Sure, what would it look like for us?"

When we got the numbers back, we were shocked. By refinancing (rolling our costs into the loan, nothing out of pocket), we could reduce from a 30 year term to a 20 year term for $40 more than our current monthly payment. Not bad!

However, we were already automatically paying an extra $50 a month towards our principal, which meant this new payment was actually ten dollars less than our current mortgage payment plus additional payment. How could we say no?

When it comes to refinancing, it all falls on the appraisal. Having only been in our house two years and three months, we were nervous about what the numbers would be. We had done so much, but would it show?

That meant crunch time to touch up the house, which meant a few big projects, including wrapping up painting the exterior of our house.

You may remember, we've been painting since we owned the home. Two years later, we were in somewhat of the final stretch. With our guest bath remodel, we had one exterior side only halfway painted after replacing the window and some of the shingles. Our front had only been partially painted because of a gnarly vine.

So, with a few days until the appraisal to spare, we got it done.

Lots of scraping, especially around windows where paint had bubbled at some point. Luckily, all of the wood underneath was normal.

For days straight I painted scuffed up baseboards, window frames, mullions, and touched up other spots.

Not to mention, we finished the exterior (less two sides that barely get seen). We went from dull and drab (top) to a much nicer finish (bottom).

I still feel like I'm getting back to normal after a weekend and nights spent working to get everything done. But, it was all worth it. We got our appraisal report back last Friday afternoon and we have added $45,000 in value to our house above what we paid for it. To that end, our house value was raised $35,000 above what the value was two years ago.

How much did we spend to get that value? We estimate a ton of sweat equity and about $10,000 in materials/projects. 

Here's a good house progress post from a year and a half ago - I need to do another one with our house now!

Now, having that report back, our bank said we no longer had to pay PMI, because we had raised the value of our house so much and our new loan was less than 80% of our home's value. Yes! That meant knocking another $30 off of our new estimated loan payment. If you're keeping track, that means our new monthly payment is only $10 more than our old monthly payment or rather, $40 less than what we were paying with our additional principal payment. Essentially, we'll be saving $40 a month. Woo!

I decided to do this post to help others and shed some light on the process. It's been very interesting for us as first time homebuyers to have all of these options. Here's to closing on our new loan this Friday!