To help my cash flow, I refinanced

It’s either networth or cash flow when we measure and talk about the health of our personal finance and how to improve it.

In many cases, money is risked or sacrificed to generate more cash flow through buying some sort of investment to generate monthly pay out. Vice versa is also true when asset that generates cash flow is sold for a lum sum of cash.

I recently just closed on my refinance of my condo… thank god~! This one took longer than I thought. The background story is that I bought my place in 2008 with a 10% down payment when I got lucky in a small window where banks had loosened their lending requirement. That said, I was left to pay private mortgage insurance (PMI) as part of my mortgage. That’s a $200+ on top! Oh, what did I choose to put on myself… anyways, with the recent property price coming back up and mortgage rate down more than ever, I decided to refinance.

refinance_take_my_money

So in my case, I “sacrificed” many thousands to get myself that 20% equity to remove the PMI by going through refinance. That plus the 4% interest rate on a 30-year mortgage, I had reduced my monthly payment by more than $500. Although the “sacrificing” makes me feel sad, I think and feel that it is worth it because if I lose my current job, I have more options such as taking my time to find a job I want, doing a simpler job that means less pay, or even starting my own business. Less fixed cost to deal with is good.

A few other take away points from my refinance experience…

  1. Never expect to close with 30 days or on time because most cases… it won’t. It took me about 1.5 months for this refinance.
  2. For condo owner, know your HOA’s insurance coverage of your dwelling. Because if it already covers the reconstruction of the unit to original form, you won’t need to show prove of your OWN insurance coverage. Unfortunately, I had a young loan agent who is not familiar and that caused me some headaches with handling my home insurance coverage and potential higher premium that is not necessary.
  3. Pending sales DO NOT make direct comparables in the property price appraisal process. Only final sales do.

I was hoping my appraisal price to be higher so I can put less money down in the refinance process. Maybe if the market gets really hot next year, I can try again. BIG if. A man can feel greedy, right? Me think it’s ok as long as I don’t act too greedy.

At any rate, it’s hard for the mortgage rate to go much lower… and many real estate market has rebounded in price. That makes now a good refinance opportunity, especially if it does not cost you a lot relative to what you had saved.

Originally posted 2012-12-26 23:14:48. Republished by Blog Post Promoter

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