Our Financial Preperation – Part 1 – Refinancing the House

I’ve always been a believer that multiple streams of income, along with a reasonable budget which includes savings, was a way to achieve financial independence.  All of us are in different financial shape and the word “independence” when used with finances, is a relative term.

To date here is what we have been doing – Part 1:

Refinanced Home:  With the recession the interest rates dropped.  I was able to build this home on a few acres at a reasonable price resulting in a 20 year mortgage at 6.25% interest.  We refinanced to a lower rate of 3.25%. Of course we were able to take advantage of this because of the past down-economy which might not be something found by the time others decide to start their planning for a future in an RV.

Fortunately our current mortgage holder (Wells Fargo) had a plan which would refinance the home at the lower rate, at absolutely no cost to us to include points.  There was no appraisal and all the paperwork came in the mail.  This lowered our payment considerably.  We had 10 years remaining on our original mortgage contract and Wells Fargo agreed to keep our refinanced term at 10 years as well,.

As I said, the refinance lowered our payments.  We have always made extra payments towards the principle equal to one payment extra each year.  That lowers the length of the payoff considerably and reduces the interest charges.  We applied the monthly savings from refinancing to the payment and that brought us down to owing for the next seven years rather than 10.  We plan to increase the extra payments toward the loans principal in order to drive the payoff date of the loan even lower than seven years.

I’ve considered what some may be thinking – that paying off a loan where the interest is tax deductible might not be a good way to spend extra money.  For us, we have not been able to file a long form tax return for two years because our deductions are so low it has been best to just use the standard tax deductions.  One could write a complete article about the pros and cons of paying off a mortgage early. For us, financial independence includes being completely out of debt.

That’s it for tonight. The World Series baseball game is starting.  We live in Kansas City and this is the first time since 1985 we have been this far in post season play.  I’ll get around to posting another topic about our Financial Preparation which will include a lot more detail regarding what we believe will be our cost to full time in an RV and our expected income.

kansascityroyalsneonsign (2). 2014 World Series – Let’s Go Royals

Thanks for reading and posting your comments.

Mark from Missouri

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5 thoughts on “Our Financial Preperation – Part 1 – Refinancing the House

  1. Mark we did a refinance in December last year and another in progress now. So seems like we are on the same track. Having no debt is the most important factor to full timing in the RV.

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    • Our refinancing just fell into place and was not part of our RV planning. It did however, offer an opportunity to lower the payments (at no cost). We are applying the savings plus a little extra to get the mortgage paid off sooner. We don’t get any tax benefit from the mortgage interest so it makes since to get the thing paid off and not have to incur the monthly interest charges. Thanks for following the blog and hope to learn from ya.

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  2. Mark,
    You have the right idea, being debt free when you retire is the best way. Caite and I wanted to be debt free so bad that we lived in a 2-car garage with two teenage kids while we built our own house and paid for everything as we went, two years later the house was finished and we owed nothing. The house felt better than any house we had ever lived in before. Seven years later a couple we never met before asked us if we had ever thought about selling our house, 30 days later they bought the house with everything in it. This is when we started really talking about retiring early and being debt free.

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    • Glenn,

      Way to go living in the garage while you built the house. You must have done it right because someone wanted to buy it in such short order.

      I built our home as well. In a month we will be debt free other than the house payment. We are going to apply any extra cash towards paying off the house which only has about seven years left on the mortgage. I’m telling myself to be prepared to retire in four years but know it will be best to keep saving for a few years after being debt free. We want the flexibility of not having to work for money. We do plan to reduce our expense budget by workamping or volunteering for a spot for the first year and a half.

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      • Hey Mark,
        You probably have heard of “Dave Ramsey” and his ideas on becoming debt free, if not you can find him on the radio. I listen to him so much that at one point I could have taught his class. Vehicles drive better and homes feel better when you don’t owe anything. Life outlook is different, easier. Good luck on your plans, I bet y’all will make it.

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