Tuesday, February 26, 2013

Join Me In A Happy Dance!

Hey Humble Readers!

I am such a happy happy hobbit today!

We have been living in the hobbit hole for almost five years.  That is almost longer than anywhere else I've lived in my lifetime.  When we bought this place it was a huge step up from our dumpy one bedroom apartment with carpet in the kitchen (for which they were charging us more than $900 a month), but we didn't have any savings.  So the only mortgage we qualified for was a 40 year, zero down mortgage (an option the government has now vetoed). 

That's right, a 40 year mortgage for a two bedroom condo.  Yikes!  But we wanted to start building equity and the payments were less than what we were paying for rent, so we went for it. 

Fast forward almost five years and our mortgage was up for early renewal.  I knew that the call would be coming from the bank, and given what our financial picture has looked like for the last couple of years, I was fairly concerned about what kind of interest rate we could get.  

I fully and honestly confess that I know very little about how mortgages work, other than you borrow a lot of money from a bank and they charge you a lot of interest, and then you pay them back for years and years and years.  I have had images of us being in our late 70s and early 80s still living in this condo. 

So the call came from the bank just before we left for K-town.  The mortgage was up for early renewal, and there were some good rates available, but they were only available until the end of February.  I scheduled an appointment for today, and my Beloved and I made our way down the hill to see our mortgage specialist.

I was worried.  I was actually really worried. 

It turns out that I had absolutely nothing to worry about.  At all.

Apparently, we made a great choice five years ago when we chose to pay our mortgage weekly.  That has given us a huge leg up.  Simply by paying more often we were already down below 30 years on our mortgage.  I was happy to learn that. 

And then the mortgage lady told us that she could cut our interest in half.  While that sounded good to me, I didn't grasp the big picture.  Until she showed us our payment schedule on her computer screen.

We have gone from a 5.39% interest rate to a 2.69% interest rate.  And by keeping our payments at the same amount each week we have knocked a whole lot of time off our mortgage.  As of today, it would only take us 17 years to pay off our mortgage. 

17 years!!!  Do you know what that means?

It means we are no longer upside down in our mortgage!  We are paying more toward the principle than to interest.  We are moving forward, not backward.  We are gaining ground. 

We are locked in for two years, which fits our current plan almost perfectly.  We are going to live as cheaply as we possibly can for the next year and a half or so, and pay down as much of our debt as possible.  With the added income from my Beloved's new job, we will hopefully knock out two thirds or more of it, if we can. 

And then, in two years, WE BUY A BIGGER HOBBIT HOLE!  Something with 3+ bedrooms, 2+ baths, a finished basement and close to a park.  Preferably a townhouse or a duplex (my dream house is currently available in our price range... hopefully something similar will be available two years from now). 

I have a perma-grin on my face.  Who will dance with me? 

(As an added bonus, when I stepped on the scale this morning I was thrilled to learn that I am now 26.5lb down!  Only 8.5lb to go for my first target!)

6 comments :

  1. Hooray! Congrats on all fronts! I'm sure that feels so good! When the time comes, I'd be delighted to virtually house hunt with you. ;)

    ReplyDelete
  2. Wow! That is fantastic on both counts! I can't imagine having our house paid off in 17 years. That would be amazing!

    ReplyDelete
  3. Woohoo! Congrats on the good news from the bank and the scale!

    ReplyDelete
  4. Woot!!!! I will definitely happy dance with you! That is awesome! Best news I've had all day... and it's not even my news. LOL. Amazing! I can't imagine being at 17 years left of a mortgage. Wow!!!

    ReplyDelete

Hobbits are social creatures, and love hearing from friends old and new. Pull up a comfy chair and let's get to know one another.