It was the rarest of July afternoons: The kids were at playdates, and I didn’t have to work. I had two choices. I could relish a rare day alone at the beach. Or I could sit at my desk and finish what I had spent months procrastinating about: Putting together our mortgage refinance application.
I sighed. And I sat.
For months I’d battled my paralyzing fear of the refinancing process. Was our credit good enough? Were our debts too enormous? And, most terrifying of all, would the house appraise for the right price? We hadn’t paid off a lot of our mortgage yet so we had little equity. The value of our home would have had to increase during a time when home values were stagnant or decreasing. Our banker warned us this was far from a slam dunk.
But I told myself: What’s the worst that could happen? We’d be out the $750 application fee. But if the loan was approved, we would save almost $500 a month. Rates were so low and who knew how long they’d stay that way? It was time to take the gamble.
My heart raced as I sought out our tax returns, recent pay stubs and investment statements. I was forced to take a hard look at how much money we had, how much we owed and how much we wish we had. We owed more than I wanted. And while our retirement savings accounts were in good shape, our personal savings were – well, let’s just say our monthly earned interest could be measured in pennies.
I looked at all those numbers and berated myself. We should be saving more! We should be paying down that debt! Then I took a deep breath. That $500 a month would help us do that. I sent in the application.
When the appraiser showed up, the house was immaculate. Flowers bloomed in the front yard. I chatted up the recent retail and residential boom in our community of Rockaway Beach, N.Y. I casually mentioned the number that would give us the loan-to-value (LTV) ratio we needed to qualify. When the report came in, the number was nearly exactly the same.
On Oct. 26, the bank’s lawyer sat at our dining room table and navigated us through the paperwork. We joked about the rain and howling winds outside—another overhyped “hurricane” for sure.
In less than an hour we had a new loan that would free up some much needed cash. At the time, we didn’t realize how badly we’d need that money. Three days later Hurricane Sandy hit New York, bringing 3 feet of water through our doors and flooding our newly refinanced home. My husband and I were shell-shocked by the damage, but in awe of our luck.
Had I chosen to go to the beach that day instead of filing that application, our refi opportunity would likely have gone the way of our entire first floor. The real risk, it turned out, wasn’t in filing the application. It was in waiting too long to do so.
Check out Cynthia Ramnarace’s blog at: www.cynthiaramnarace.com/365to40.