Back in the Saddle

Well, after a nice long holiday and a chance to "decompress", I'm back in the saddle. I'm also happy to report that I just negotiated the lowest mortgage of my life so far.

My wife and I decided we would gamble on a variable rate mortgage. It actually is a bit different than your average ARM in that the mortgage rate will fluctuate each month according to the prime rate at the bank with which we took the mortgage. But everything looks very good. For one thing, the rate is just over 1 % less than our existing rate on our expiring 3 year locked-in term. In fact, it's actually lower than the current 3 year locked-in rate offered to us by our bank. And while our previous mortgage had limitations on lump sum prepayments and whether or not we could raise and lower our monthly payments, this mortgage is completely open. What THAT means is that we can put any amount of money on our mortgage at any time -- no restrictions. It also means that we can lower our monthly payment to the minimum, or increase it at any time, also without restrictions.

Our interest rate? It's set currently at 3.65 %. Now, we all expect prime to go up, but prime would have to increase a full percentage point before we will even hit the current posted rates. And by then, we'll have paid off more of the principal, because we've increased our monthly payments by about $100 over the required minimum payment.

And we got all the negotiation done with enough time to spare so that we could have changed lenders if we wanted to, because our mortgage isn't due for renewal until October 25.

I love it when a plan comes together.


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