Tuesday, December 25, 2007

Real live good news for my mortgage!

When I got divorced, I knew I had to sell our house in order to move closer to work. The commute was a nightmare. But, I did love that house. We put it on the market at $540K in August of 2006 and sold it in May of 2007 for $498K. Not exactly what we wanted but we both ended up with about $40K. I make myself feel better by realizing two things: a) I save a hundred bucks a month in gas and b) our neighbors put their house up the weekend ours sold. Same model, just as many upgrades. Theirs is still on the market but priced currently at $392K.

I purchased my house in May for $345K and could only put 10% down. Thank God I can deduct my PMI this year. Let's pray for next year. I had a few dings on my credit report that gave me a horrible rate of 7.375% and a whopping payment of $2,549. After disputing all three dings, they were removed (more on that to come). I just refied at 6.25% and it dropped my payment 200 bucks a month. Color me happy!

I just did a very good thing this week. I get paid weekly, so I signed up to have 1/4 of my mortgage payment, or $590, taken out of my bank account and sent to the mortgage company weekly. My loan has no prepayment penalty so this works well. Here's what it will do for me:

  • Decreases the amount of time before I can have my PMI removed from 7 years to 4 years.
  • Decreases the total life of my loan form 30 years to 23 years.

Essentially, the weekly payments will decrease the amount of interest I have to pay and will also create an extra payment each year. Four times a year I'll get five paychecks a month. I figure my budget with four paychecks so this doesn't affect my budget at all! It actually helps me get that money out of my account and into something good instead of a retail store. It also leave me enough money in that extra paycheck to pay off some credit card debt, as well.

I'm feeling rather happy about life. It will also help me to make sure that I don't over spend one paycheck when I need to set that $590 aside. It's just gone from the account the same day I get paid. If I don't see it, I won't spend it.


suchsimplepleasures said...

i've been trying to talk my hubby into doing the mortgage the same way. that way, when the full mortgage is due, it isn't crunch time...
it's a great idea, i think!

Little Dough Girl said...

Thanks for the comment! If you'd like, I don't mind sharing the analysis that they sent to me so I could see my savings. When you see it on paper, it's pretty exciting. It should be all you need to convince the hubby!

Louise said...

good on you! it's such an easy, painless way to save on your mortgage. another thing you can do is every year just increase the payment by $20-50, it's surprising how the little amounts add up.