Thoughts on a Hot and Windy Night

Kevin 22/04/2009

In Texas spring turns quickly to summer. Today reached ninety degrees, leaving it hot even after the sun went down. However, the wind has kicked up setting the chimes in the back yard alive and howling through the trees in the back yard.

I can’t sleep.

Not sure what is keeping me awake – the disappointment with our home mortgage re-finance process, the thoughts of Kathryn leaving for college, the sudden news that I will have to be away next week on business. All of these individually are small things; however I think that with them all together my mind is racing just a bit too fast for sleep to come.

Trying to take advantage of the low mortgage market seemed to be a no brainer. Reading about it on the bank website back in January made it seem so easy. Of course I would want to keep the loan with them. They have been like any other company that I have a recurring transaction with – they take my money on time and automatically, they get statements out on time, and each year I visit their website to see what to put on my tax forms.

However refinancing your mortgage is like buying a house all over again – just without the joy of a new home at the end. You pay a great deal of money to a lot of people you never see and at the end of the process you have the same crabgrass and squeaky door that you had when you started. The only difference is that you have a larger mortgage.

I know – reducing my rate is a good thing. Over twenty years I will save a lot of money. However, I am worried about the short term. While I don’t have to pay the interest, I also lose the interest deduction – so I am not sure if I come out ahead or I just pay the black hole of government what formerly went to the bank.

The real kicker is learning that our house is worth thirty thousand less than what the county has been taxing us on. That was the bad thing – especially since it messed up the plan to consolidate the first and second into one loan.

So at the end of the process – if I decide to sign the papers – I will have spent almost ten thousand dollars to reduce our payment by just over a hundred dollars.

Does not seem like a good deal to me. Especially after the delays, the bad information, and the constant changes in the benefits of the process.

It really all comes down to the appraisal. My next task is to see if I can sue an appraiser for malpractice. I have seen nothing that says that the home values in our area have dropped that much. I understand – and sympathize – with people in California and other major markets that have had their values run up and then collapse. However to suddenly walk in and find out that our house is worth less than the price we paid at the bottom of the dot-com bust is really disheartening. Especially when we bought the house for under the appraisal at the time due to the prior owners being relocated by their company.

The real question is “will we stay in this house after Alex goes to college?” That is the one that I am not sure of. One side says “sure – we put so much work into it” while the other says “downsize, get rid of the yard, and enjoy your weekends for a change.”

You guessed it – I am not one of those who thrive on yard work. I would gladly pay someone else to do it if I was willing to spend that kind of money. Instead I drag the mower out and do my duty, but I can’t say I look forward to it. Instead I look forward to fall and the time when the grass goes from its summer heat brown to winter cold brown.

The money gurus at the bank tell me that the break even is six years. I think – with the lowered interest payments – it may be a bit shorter, bit I am not sure of the tax implications of losing the interest deduction on the lower rate. Of course, it is money I will not have to pay. Seems like one of those problems I could model in twenty different ways and come up with twenty different answers.

Four and a half years till Alex goes to college. Kathryn leaves this fall. Hard to comprehend – harder to understand where the time went.

Makes for a sleepless night…

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