For the past five and a half years we have had a type of home loan called an MTA, which stands for Mortgage Treasury Average. Traditionally they are used for commercial loans, but because Neal was in the mortgage business at the time, he knew the details and explained how it would be good for us. Basically the interest rate fluctuates each month according to the rate at which the US Treasury borrows money from foreign lenders. The interest rate changes each month, but the loan payment stays the same for 12 months at a time. Another feature of that type of loan was that each month we had 4 options on how to pay it - a minimum payment, an interest only payment, as a 15 year fixed or as a 30 year fixed.
The interest rate on our loan for the past six months? An unbelievable 3.26%! We've been paying down the loan much faster than we expected on our fixed income. However, both of us have felt like it was time to refinance into a 30-year fixed loan before the insanity in Washington DC sent interest rates skyrocketing.
Today after I made the mortgage payment, I stopped by the loan department to find out their rates on a 30 year fixed. She gave me the numbers and I came home to discuss it with Neal. He looked at me and said, "Let's do it" so I called Trina back and asked her to hold some time for us. We took our paperwork and returned to the bank, turned over our documents, signed the 1003 and thirty minutes later we had a locked loan at 5%. We haven't closed yet obviously, but our part is done while it goes to processing. It will be a slight increase in the payment but not a lot, and at least we don't have to worry about the impact our nation's current financial attitude will have on a future interest rate.
The bonus is that we both feel a sense of relief that this is handled so I'm sure we did what was best for us at this time.
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