Today's the day

I will be heading to Spokane to move Jonathan back home in about 3 hours. Before I leave, I will meet an appraiser at my house for a quick appraisal. We're refinancing our mortgage - both first and second - for the first time ever. We've had a pretty good first mortgage for the past 20 years. It is an adjustable rate, but it had a great cap on the annual adjustments and, with the exception of a year or two early on, when interest rates were insanely high for everyone (back in the era of 11 and 12 percent mortgages), the interest rate has been lower than the going rate for the year. It was as low as 3.2% for the past two years! Alas, rates are edging up again. This year the rate went to 5.32%. Given today's prime rate, I am convinced it will be between 6 and 8% next year. My second mortgage is at 7.65% fixed with a home equity line of credit attached to it that is already over 7%, is adjustable monthly, and is surely going nowhere but up. So, time to refinance. I visited my bank, the holder of both the first and second, to discuss a new second. My banker suggested we do a new first instead. I was a bit reluctant to refinance the first - we have 11 years left on it - but he said "let's apply and see if we can get an interest rate somewhere between where the first and second are now", so I agreed.

Part of the reason I wanted a new loan was to pay off our credit cards which have, to my chagrin, gotten way out of control thanks to college expenses and the fact that I have lost about $10,000 a year in income over the past two years. I used to work one day a week for Litehouse Custom Printing as their network admin, but I got the network working so well, there's nothing for me to do on a weekly basis, so now I just work ad hoc, resulting in a huge income deficit. I was horrified when I added up the balances on my credit cards and discovered we are the average US household. Ugh.

So, I went through the slick online app in my banker's office and after just about 15 minutes, this screen came up saying "Congratulations! You have been approved for a mortgage for x amount of dollars at 5.75% fixed!" WOW!!!! I was so so so so so happy! I yelled out "thank you Lord!" and told my banker I wanted to kiss him! My second had 13 years on it and this new loan is for 15 years, so big whoop - it will take us two years longer to pay it off. We'll actually pay much less interest than had we maintained the status quo AND... my credit cards will be paid off! I am going to cut them up and never carry a balance ever again. This new loan will actually put about $8000 cash in the bank, will cost me $100 a month less than the existing first and second mortgage payments combined, and free me up from almost $1000 a month that I was paying on credit cards and the line of credit. Of that $1000, I should be able to put at least $500 a month in savings, maybe more. When I went through two months worth of bank statements to find out where my money goes, I realized we spend a fair amount on eating out and "miscellaneous" stuff we could easily do without, not to mention $1000 a month on food and sundries - for two people! That's crazy. I buy a lot of steaks and convenience foods nowadays, in other words, expensive stuff. Time to change that!

This new loan is like getting a clean start. As a result, I am going to really look at our spending habits and make some serious changes. I don't want to have to keep getting PLUS loans to pay for Jonathan's tuition so I'm going to try really hard to put away enough each month to cover at least half his tuition. After grants, scholarships, and student loans, we are usually left paying half the total cost of his tuition, room, and board. This year that amount was $14,000. Tuition, room and board are all going up next year - about $2300 - so we'll be looking at over $15,000. I don't see how we could possibly pay it all from our current resources, but we should be able to cover almost half that. It will be a lot better to borrow only $7000 a year from the feds than twice that. So... my loan interest rate hinges on the results of the appraisal. If it comes in where I think it will, we're all good. If it comes in much lower, the rate could go up a couple of tenths. I know the appraiser pretty well, so I'm hoping he appraises on the high side and gives me some idea of where he thinks it will end up before he leaves today. Once he is finished, I'm heading to Spokane in the Suburban to pack Jonathan up and move him and his junk back home. Yippeee!