Last month, the Beloved and I watched the film Margin Call. It was a dramatized take on the events at a prominent Wall Street financial firm (they should have disguised the name as Breeman Lothers) as the home mortgage based crash of 2008 began to unravel around them. It was a good, albeit depressing, film. Of course, all of us that rejoiced in our always-growing 401ks and real estate holdings have had to eat the down side of being over-extended. Maybe we’ll all be a little more cautious of schemes that seem a little too good to be true in the future.
That film was on my mind as we completed a refinancing of The Aerie this week. We had been speaking with our financial advisor, and he had really lobbied us to take advantage of the extremely low mortgage rates. One of the problems today – as opposed to the other times I’ve financed a home in California – is that now lenders are actually requiring 80% loan-to-value (in the good-old-days of bad-old-practices, you never had to put anything down, which when you think about it, is crazy). And giving the plummeting local housing values over the last couple of years, that missing 20% was no longer in equity.
Well, we went through the process – locking a rate, getting the appraisal, and crunching the numbers. As it turns out, we could re-fi but we’d have to extract some dough from our “rainy day” fund. Yet our new rate will save us nearly $1200/month, which should let us rebuild the rainy day fund pretty quickly.
So, we signed and signed and signed and it’s all done.
Hopefully, it won’t rain on us for a while.