Refinancing at 3.5% Interest Cut My Biggest Bills in Half

I refinanced $50,000 at an interest rate of 3.5%. It’s felt like a long-awaited pay raise. My current house payment is $357 a month. I expect to pay this for the next 15 years. This mortgage used to be my biggest monthly financial burden. Now, it gives me the least of my worries. Refinancing lowered my payments by $350, which let me pay off a student loan. I am single and living on one income — that $350 a month is a significant amount of money for me.

About the house

My home is near Louisville, Kentucky. It sits on 5 acres, surrounded by trees and much wildlife. It has a finished basement, 3 bedrooms, 2 1/2 bath, living room, fireplace, wood stove, dining room and kitchen. It is my safe haven. During the refinance process, it appraised for $160,000.

What I paid before

Still married, we bought the land and built the house for $68,000. That was during the Reagan years at an interest rate of 10%, a number that sounds insane today. The payment was over $700. We divorced 10 years later and I chose to keep the home for the children and me. I was able to refinance, but had to borrow additional funds to pay my ex husband the share of accumulated equity. It then appraised for $103,000. I was back at a loan for $70,000, but the interest rate was only 5.25%. For the next 10 years I paid $565 a month. I could easily afford that.

The pain of student loans

Moving on with my life, I went back to school and took classes as time allowed and as I could pay for them. In order to ever see a promotion I finally had to buckle down and finish the degree. I took out student loans to complete the last three semesters. It was wonderful to graduate, but then the payback of $15,000 began. That student loan had an interest rate of 6.8%.

Record low interest rates

I managed to pay the mortgage down to $40,000. Finally, there was light in the tunnel. Still, I paid about $700 for the house and the student loan. When interest rates began dropping, I really didn’t want to go through the hassle of refinancing again. However, when my lender went down to 3.5% I sent an email asking for more info. Sure enough, I qualified to apply. The bottom line looked too good to be true. I was able to refinance the house, add on the student loan, and have one payment of $357. I just couldn’t let that offer go.

Do it while you can

These interest rates won’t last forever! The process of refinancing was incredibly quick and easy. It seems lenders are expecting you to come in. They are working overtime. It is the thing to do right now. I wouldn’t be able to find an apartment to rent for $357 a month if I wanted to. My advice to homeowners is to keep your real estate, make it as affordable as possible, and rest somewhat easier during these uncertain times.