I haven’t researched it (at all) but I’m assuming that this is some kind of after-the-fact reactionary federal government proposed “solution” to the housing crisis of the past few years, you know, an attempt to quell the number of foreclosures that dot the landscape.

But that’s where I lose the connection.

Refinancing at a lower rate (at best, 3 or 4 percent lower which, technically speaking, is nothing) doesn’t solve the foreclosure problem.

For instance, my newest neighbor moved in back in 2006 and paid around $275k for their home.

In general terms, it’s pretty much the same house as mine except that I only paid $141k for mine in 2002.

Following the housing “slump” our homes are currently only worth around $200k.

It’s not rocket science to come to the conclusion that my neighbors are underwater (they owe more than the house is worth) and are likely prime candidates to “walk away”.

The re-finance “solution” won’t ease their pain.

It’s not the interest rate on their mortgage to blame — it’s that they paid too much for their house.

So what’s the point of this government proposal again?

To make it easier for people who can’t afford homes in the first place…again?

It’s too soon for history to repeat itself.

This blog apparently is repeating itself…

Back in 2008 I asked, Are Home Values Important to the Economy?. That post was along the exact same line.

It was a better read, though…

I’ve lost my touch.

No, really…

- – - – - – - – - – - – - – - – -

Full Disclosure: I freely admit that I benefited from the easy and available money back when I purchased my home with a tiny tiny tiny down payment.

Yes, mortgages were easy to come by and I’m fortunate enough to have rolled the dice, made a “wise” investment with the money loaned to me, and come out the other side a winner with a low rate, a low monthly payment, and a house worth more than double what I still owe.

On one hand, that move gave us great financial, well, not freedom, really, but…flexibilty, I guess.

I mean, suddenly having a sub $500 mortgage payment when you’ve grown accustomed to a $1500 mortgage payment for years on end should be lifestyle altering…

And it was…

But it feels like we’ve gone the wrong direction.

Back then, we were debt free and living pretty comfortably — a tiny mortgage payment was really just icing on the cake.

The good kind of icing where you can’t feel the sugar crystals in your teeth. I recommend Betty Crocker.

One year later, though, we’re $28k deep in credit card debt and our mortage balance $4k higher than it was.

That’s not progress…

Déjà vu?

Money’s not tight, like, “Oh crap, how are we going to pay the water bill,” but it’s not growing off of trees like it probably should be.

Still, though, while the re-fi may have sparked the tailspin of the last year, I’m still convinced that it was the right move.

I just lost my way shortly thereafter…

I stopped paying down the mortgage like a maniac.

That was a good move, actually, but it also kinda gave me that stuck-in-the-mud type of feeling. The balance isn’t falling — and how could it with $500 monthly payments?

Financially speaking, it’s unwise to overpay it. Mentally, though, I really miss seeing the balance drop each month. For a few months there, I was knocking it down over a thousand bucks per month and it felt great.

Really, though, the big mover and shaker of the past year was the major renovation that we had done last year.

I don’t regret it — it HAD to be done and it’s made our house a safer and more comfortable place to live.

At the same time, I really thought we’d have it paid for in full by now.

And we should.

I just didn’t stick to my re-payment schedule.

And I kept spending. An expensive trip last summer and the new car purchase just a few months ago were crippling, just crippling, and we haven’t recovered.

Making matters worse, in another month or so, Henrik will be joining Duncan in daycare.

Wanna talk about a budget buster?

More on that later…

I mean, this should have made a HUGE impact financially but the thing is, it hasn’t.

At least not yet.

It’s not my own doing — it all goes back to that pay cut that I took. It essentially cancelled everything out.

Sure, I’m paying less but I’m also making less. It didn’t get me anywhere.

On the other hand, I guess it’s been business as usual around here as I haven’t really felt the effects of the paycut — when most of my co-workers probably have.

I dunno, still seems awfully dark and cloudy.

Probably because I thought it’d be sunnier…you know, having a sub-$500 per month mortgage payment…

I guess it just hasn’t been as great as I’d expected it to be…

If you haven’t been keeping up with my nonsensical postings over the past few weeks, well, here’s a quick and dirty recap:

• At the end of April we thought we’d take a shot at refinancing our mortgage to eliminate paying PMI, lower the interest rate, and, most importantly, lower our minimum monthly payment considerably. [link]
• Through the re-fi process, we found out just how awesome our credit scores are. [link]
• When we found out that an apprasial was required to move forward and schedule a closing date, we freaked out because a decent chunck of the interior of our house could *and* should be considered a total s-hole. Rather than do a quick and dirty (but still costly) clean-up, we called in an extreme makeover type of contractor. [link]
• The quote for the renovation came just over $33k — we cleared out all of our furniture and green lighted the project. [link]
• Just wanting the potential new lender to leave us alone, and because we don’t *really* need to refinance anyway, we reluctantly scheduled the appraisal even with 1/3 of our home completely empty and in various stages of disrepair and demolition. [link]

Okay, so now you’re up to speed.

So, anyway, the appraisal came in and it’s not as high as I’d expected it to be.

I mean, I could argue about the area homes that they compared our home to until I’m blue in the face — I don’t know how a smaller cape-style home on a 4-lane state highway that faces a HUGE auto dealship can be considered comparable to my huge (in comparison) three story double gabled-ell on a tree-lined residential street but, then again, I’m not an appraiser.

Eitherway, the appraisal came in high enough so that we’ve got nothing to worry about.

We scheduled the closing for next Thursday so, unless anything unforeseen comes up (like if they pull our financials again and see a sudden $17k credit card balance), I won’t need to pay my mortgage at all in June and starting in July, I’ll only need to pay $500 per month.

That’s 60% less than what my current mortgage payment is!

So in one fell swoop, I’m on the cusp of eliminating PMI, paying off my mortgage faster than planned, and paying for this remodel faster than expected too.

I can’t wait for Thursday to be in my rear view mirror so that I know that it’s all official.

Then I’ll have my cake and eat it too…

No, really, I can’t believe how things are falling into place so quickly — it’ll be a huge load off of my shoulders when it’s all done.

Wow… What a week…

I’d meant to post something each and every night regarding all of the happenings but sometimes you just can’t find the time. In that respect — this week totally sucked…

On Monday night, we scheduled that appraisal that we’ve been avoiding since we initiated the mortgage re-fi exactly one month ago.

As a result, I hastily mowed the lawn and filled the POD in the driveway pretty much up to the limit to eliminate additional clutter. Somehow I managed to do this all of this prior to the finale of 24.

On Tuesday evening, the appraiser came over and asked about all of the updates (roof, siding, furnace, etc…) we’d made and then he ventured through the house taking pictures.

Obviously, the entry room was a topic of discussion. Further, since we’d filled the POD already, the parlor and the dining room were also topics of discussion…

Seemed like a nice enough guy but if I’ve learned one thing from all of the BMW and Cessna tucked away in the garage or an arcade game in the kitchen but he clearly mentioned repeatedly that “all things have value”…

Even still, I’m not a big fan of such subjective things. The success of our loan hangs in the balance of what one guy “thinks”.

I mean, it’s either worth it or it isn’t. It should be concrete. We’re either a risk to the lender or we’re not. It shouldn’t matter what color our walls are painted or how cluttered a one year old’s room is. It isn’t a cash out re-fi either so we’re not flight risks in the sense that we’re trying to squeeze money out and run. Our credit scores speak for themselves. This big gray area of unicorns and rainbows, err, subjectivity seems, I dunno, unfair, I guess…

And, really, this is a *tiny* loan in the grand scheme of things. I could go out to our local Porsche dealership tonight and get an auto loan (at a comparable rate, even) for a new Cayenne without a problem — but for this I need to jump through hoops. It’s just a little frustrating…

So, back on topic… No word on the results of the appraisal yet — though my credit card was dinged for $445 for good measure. I hope it doesn’t turn out to be $445 spent for nothing.

Wednesday was Duncan‘s first birthday and we spent the day at the Bronx Zoo. The picture at the top of this post was taken on Wednesday.

It was a nice change of pace, taking a Wednesday off from work, but somewhere along the way (I wrestled a hippo) I messed up one of my wrists pretty badly. I mean, it hurts…

A few years ago I jammed my other wrist playing hockey (and stupidly continued to play for months on end) and it took nearly a year before it felt 100%. This time, well, it’s *way* worse — one of those things where it’d probably have been a better outcome if I had just broken it…

Thank goodness I’m right-handed *and* we’ve already moved 99% of the heavy stuff out to the POD already.

Thursday night we had the contractor that gave us the $33487.70 quote come back to go over his crazily over detailed quote for our first floor renovation in more general terms and to ask a few more questions.

After a couple of hours — mostly spent shooting the breeze — we signed off on it and even wrote the first check.

Today, Friday, we wrote that $17000 credit card check to ourselves to get all of the money needed in place for the renovation.

So, yeah, it’s been a pretty busy week and, hopefully, next week we’ll find out how the apprasial went and if the re-fi is going to go through, and if we’re really lucky, demolition might even begin on the house.

And, if everything goes right, maybe my wrist will magically heal too…

Don’t unicorns have healing powers?

I can’t believe that I just mentioned unicorns twice in one post.

But this morning, my wife and I pulled a 180.

We sat down with a mortgage broker and discussed re-financing our mortgage — and not the cash-out variety so as to renovate the first floor of our home (which is desperately needed).

Nope, this was purely a defensive maneuver.

I want a lower monthly payment and I want to eliminate PMI.

That’s it.

Now, of course, we only filled out the application and all that this morning so who knows if it’ll actually come to fruition but it seemed like the right time to, well, play some defense.

See, financially, I think we’re pretty darn close to the best position we’ll ever be in — on paper anyway — with two comfy incomes, retirement accounts where we want them (and growing), over $20k in the bank, lots of equity in our home, and zero credit card debt between us.

Now most of the time I’m not one to prognosticate but I’m also not going to say that we’ll be exempt from any, I dunno, financial disasters in the future… and that’s why I want to take advantage of the situation I find myself in now, you know, before we finally cave in and buy a minivan…

This move could potentially cut my mortgage payment down to around $510 per month. I’ve made monthly car payments significantly higher than that.

That’s a difference maker.

Now this won’t mean that I’ll cut out the weekly payments or even the total amount that I send towards the mortgage anyway — it’ll just be a piece of mind thing knowing that I’ll really only “need” to pay $510…

This all, of course, hinges on an appraisal.

(insert scary fanfare here)

For long time readers, this causes me great anxiety…

The guy said that it “could” be waived and I’m hoping my financial info and stellar credit are enough to make that happen but if not, well, we might be having some quick and dirty drywalling on the horizon…

Anyway, it wasn’t a broad stroke sort of thing — obviously saving isn’t for suckers — but, right now, with rates hovering just over one percent, well, it’d probably be a wiser strategy to put the money to use elsewhere.

As things currently stand, I’m saving like crazy so much so that I’m genuinely excited to post my net worth update.

Unfortunately, that also means that I’m a sucker.

I know it’s stupid — I should be paying down my mortgage at 6-something percent instead. Though I’m nearly 10 years into my mortgage, big payments now still make a much larger dent than payments of the same size 5 years down the road.

It’d be in my best interest to hit the mortgage hard right now while my savings are earning so little.

But on the other hand, there’s a lot of comfort that comes with a big number in the savings account. And I’m really trying to save up to get that much needed renovation (started and) paid for. Right now, I’m guessing I’m about 25% of the way there.

Now I know what you’re thinking, here he goes again… I’m not flip-flopping again — just re-evaluating my options.

Again.

I just want it all…

Maybe I’ll go 50/50 in the new year? You know, throw half towards savings and half towards the mortgage…

I can’t believe I even said that — my own personal history in debt reduction clearly indicates that financial moves like that get you nowhere fast…

Yeah, it brings me some satisfaction that their name will no longer exist (though their business practices won’t change a bit). I’ll admit that much.

So long — good riddance.

But this message also brings me a little bit of anxiety. Back when Bank of America took over MBNA, MBNA’s old site had a message very similar to this — so when the day came that I had to pay my credit card bills on Bank of America’s website, it wouldn’t let me log in — even though they’d said it would be a seamless transition.

The problem?

Yep, I’m one of those people that uses the same username for ALL of my accounts. The passwords vary but the user name is always the same.

Yeah, yeah, don’t give me that identity theft lecture…

Seriously, accounts that I’d had with 5 different institutions are now all under the same umbrella — that’s an identity theft risk in and of itself, no?

Anyway, at the time. I couldn’t use my MBNA user name to log in to Bank of America’s website because I already had a checking account with Bank of America using that exact same user name.

See the problem?

Same thing happened a few years later when BoA combined their Business site with the Personal site — I’d log in and see my checking account, my BoA credit card, a couple of MBNA credit card accounts, but no sign of the business account.

Both times, the issue resolved itself after a couple of months and a few *very* confusing phone calls.

“Thank you for calling Bank of America. Account number, please?”

“Um, Jenny Jenny 867-5309.”

“Okay, sir, you should be able to log in — I have that as a valid account number.”

“Nope, still not working, when I log in, I can’t see that account, just my other accounts.”

“Well, sir, you need to use the login information you used while you were with MBNA to access that account.”

“I can’t — it’s the same as the login information I’ve been using for Bank of America.”

Thankfully, I’ve never encountered a rude BoA customer service person on the phone. Not once. They haven’t always been able to help, but they’re not jerks about it either.

So I guess that on November 9th, we’ll see what happens over on bankofamerica.com. I’ll either be able to see just my mortgage account or everything but. I’m not too worried about it — I just find it annoying.

Oh yeah, and you know what’s really lame? Even though *everything* is Bank of America now, I still can’t make same day payments or transfers between accounts. Sometimes it *still* takes three days…

What’s up with that?

Well, I’ve been on pace now for over a year to have my mortgage done and paid for in early 2014 — not that far away — but I’ve decided to take a different route and here’s the reasoning…

The primary reason is that we *need* to renovate the first floor. While I can envision having my main entry way looking as it does for another 40 months or so, I don’t want to.

The other reason is because I’m afraid that if we don’t do the renovation now (or I’m guessing in the next 18 months), we’ll run the risk of never getting it done.

See, I’ve come to the conclusion that in a worst case scenario (a major job loss), we could keep up with the mortgage as it stands now on just my wife’s income.

Now say, for instance, that worst case scenario arrives before we’re able to renovate the first floor…

See where I’m going?

Yeah, we’d be strapped for cash *and* be living in squalid conditions.

Seeing the ends are nearer for a renovation than they are for a mortgage payoff — and the benefits of a renovation far outweigh, well, the alternative (a worst case scenario = nothing), this is the wisest plan that I’ve come up with so far…

Seriously, I thought about this for like 5 minutes straight…

So I’m going to institute my “Mortgage Ladder” plan in November and start saving like a mad man.

Notice, though, that I did *not* say that I’d curb my spending…

One thing at a time…

Recapping financially, I’ve pretty much been on autopilot since the start of the summer…not really focusing on one thing over another, just kinda going with the flow.

It’s all good — debts are falling, assets are growing — but I’m sure I could make better use of the money that I fortunately have at my disposal.

So after a long conversation with my wife over the weekend, I think I’m going to try something new regarding the way I pay my mortgage.

Truth by told, the conversation only lasted around 15 seconds, but I’ve been thinking about it ever since.

See, I find myself with an entire year’s worth of minimum mortgage payments saved up. I call that piece of mind.

I know how I got there — but I still can’t believe I actually did it.

Now I’ve often complained of late that the monthly mortgage bill is a budget buster. I mean, a four-figure bill can’t help but get in the way…

So, what I’m thinking of doing is automating my monthly mortgage payment to be paid from my savings account — the one that has 12 months worth in it already.

My checking account will then be absent of the peaks and valleys that come each time a paycheck comes in and a subsequent mortgage payment clears.

All the while, though I’ll have that comfortable buffer of 12 months, I’ll continue to top-up the savings account on a weekly basis so as not to deplete things too drastically.

Make sense?

Basically, I’m taking my monthly mortgage payment from the forefront to the background and, over time, I’m hoping that it starts to feel like I’m not making mortgage payments at all.

That’s the plan anyway…