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I’ll make $18,000 in 5 years and 5 hours

May 7, 2012

Michal Ann McArthur
Bend, OR

Last February when my girlfriend and I went out to lunch, she told me that she’d just refinanced her house. My curiosity was piqued. Over tostadas, she explained the process, and it didn’t sound as intimidating as I’d imagined. In the past, I’d put off looking into refinancing because I thought the process would be complex, time-consuming, and expensive. But my friend debunked my misconceptions. With her encouragement, I decided to look into it.

I’m so glad I did.

I took notes on the experience thinking that maybe I could help some of you. With so many of us struggling in these tough economic times, making wise decisions about money can be critical. Here’s what I learned.

First, the process isn’t complex or time-consuming. I kept track of every minute I spent on refinancing, and the grand total was less than five hours—four hours and twenty-two minutes, to be precise. I didn’t count the time I spent driving to and from the mortgage lender because I usually combined this with other errands. I also didn’t count the time I took to give my house and yard a thorough sprucing up before the appraiser came. I figured that I needed to do a spring cleaning anyway, so all I did was get a head start on the project. Always a plus.

Second, refinancing isn’t expensive. The lender folded the cost of refinancing (just over $2000) into the loan so that we didn’t pay anything up front. In less than two years, we will recoup this cost because our new house payment is $90 less a month. We took out a 15-year fixed mortgage at 3.25% interest and shaved several years off the life of the loan. Interest rates are at an historic low right now and won’t continue to be this low forever. The interest on our former 30-year fixed mortgage was more than twice as high.

All in all, I figured that we will have earned $18,000 in five years and five hours. The five hours (or less) is the time it took to do the refinancing. The $18,000 is the amount we will have saved in five years by refinancing. This isn’t a small chunk of change.

Does it make sense for you to refinance? It might. Everyone’s situation is unique, of course. If you’re planning to sell your house in the next couple of years, refinancing probably doesn’t make sense for you. But if you’re planning to stay in your current house for two years or longer, then it probably does make sense.

I can’t take you all out to lunch, though I wish I could, but I can pass forward the good deed my friend did for me by telling you about my refinancing experience. Check into it. You might find that it’s well worth the effort.

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Discuss this article

Alpine Dan May 7, 2012

Such good advice. These are historic times indeed.

Jan May 7, 2012

I’m amazed that the demand on your time was so small! Such a good reminder. Thanks, Michal Ann!

Dawn May 7, 2012

An interesting read and advice for those of us who feel intimidated by financial jargon and concepts!

Sue May 7, 2012

Thanks for the info! I’m going to run right over to my file and check out our current interest rate!

Judy May 7, 2012

What a helpful article! Never occured to me the process would be anything less than daunting. Thanks for sharing your experience.

Gene May 7, 2012

Good reminder. I hadn’t realized rates were this low now.

Nancy May 7, 2012

Great info, Ann. Thanks for sharing and doing the math for us. This sounds very doable.

Kathi May 7, 2012

Great advice. Thankfully, our home is paid for at this point, but we did refinance years ago, and I’m sure we saved mega bucks over the remainder of our mortgage. This is a great time to refinance, and it’s truly worth the effort. Good work!

Andrea May 7, 2012

I never would have guessed that refinancing would take less than five hours. That’s less than I spent shopping for new insurance recently. And I sure didn’t save $18,000!

ggg May 7, 2012

good rate, good advice… be cautious about adjustable rates however!

Jonathan May 7, 2012

I’ve been putting refing off for a while. Thanks for reminding me. I’m calling my mortgage broker right now.

Suz May 7, 2012

What woudl work better is that I earn $18,000 by spending no hours. This is why I am hooked on the lottery. Can you tell?

J.K. May 7, 2012

We can tell.

Carlie May 7, 2012

Brilliant. Love this article that you wrote about finances demystified in the women’s column. We just refinanced our house even thought we bought just a little over a year ago at great rates…the numbers are still a bonus, even for us. So wonderful to hear that you felt so empowered and relieved by your experience.

John May 7, 2012

Nice article. Good attention catching title. Then short and sweet explanation. Useful information for all.

Laurie May 7, 2012

Very timely, helpful and encouraging advice. Thank you for sharing your experience and knowledge.

T. Taylor May 8, 2012

We have been kicking around the re-fi idea for way too long. Reading your article created a new spark to get it done. Thanks for the motivation.

Robert May 9, 2012

Truly useful advice! Thanks.

Kay May 9, 2012

We refinanced last year, saved a lot. Encouraged some friends to do so this year and they were surprised at how much they saved. Very good advice, people need to know and understand how this can help in this difficult time. Thanks for sharing such good and useful advice.

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