We are about to close on a home. We have over 10k saved but my husband wants to blow it all at closing. It will save us 14k if we pay 10k at closing for the lowest rate possible. Only 40/mo less on house payment.
I get he wants to save that long term but what if we do refinance? I feel 30
Years is awhile to say we never would.
Also i feel we should sit down and look at it together cause right now i feel lile he’s saying we do the rate he wants no questions.
Thoughts? Would you just let your spouse spend all the savings now to get the lowest rate ? I feel like 14k over 30 yrs isnt alot but maybe it is?!
4 comments
>Also i feel we should sit down and look at it together cause right now i feel lile he’s saying we do the rate he wants no questions.
You should ABSOLUTELY do this. I will give your husband the benefit of the doubt and assume that he just thinks this is such a no brainer that you couldn’t possibly seriously disagree with him.
>Thoughts? Would you just let your spouse spend all the savings now to get the lowest rate ? I feel like 14k over 30 yrs isnt alot but maybe it is?!
1. You should never build your budget with the expectation that rates will get lower. They might, but they might not. You have to be able to afford what you’re getting now
2. Is this literally *all* of your savings? You’re putting yourself into a very tight spot if you will be literally out of cash. You should have AT LEAST a couple months worth of savings to pay expenses if one or both you lose your job.
This is pretty simple math. it will take you more than 20 years before you make up the difference. Instead of dumping all the money into the mortgage (I presume you’re buying points or something) you could just pay extra against the principle as your budget allows. That will ALSO safe you a ton of money in the long term.
Personally, I would not spend my cash this way. That’s only 4.8% return on your money. If you’re really aiming to save money over a 20year period, you’d be better off putting the 10k into an index fund
Also, are you putting less than 20% down? Because saving up cash to get rid of the PMI is going to save you a heck of a lot more than 40/month.
I would add that rates are really high right now and if he’s overly sensitive about rates, look into 7 or 10 year ARM. I’ve had my mortgage for a decade and I’ve refinanced 5 times.
Keep the $10K liquid!!
Save that money for unexpected purchases on the home after you move in. Also escrow is almost always figured wrong that first year you move in and will have to be caught up.