Recent Refinance

by Rocket Finance

When my wife and I were first married, we made $42,000 annually – and spent approximately $35,000 per year. We were able to save up about $12,000 to use for a down payment on a small starter home. After our first child was born, our income dropped to $24,000 – but our spending remained the same. We did not keep a budget, just spent money as needed or wanted . . . I have pieced together the information over the last couple of years. Our annual income is now around $35,000, but the damage was already done. We finally made the (ill-advised) decision to roll all of our credit card debt into a home equity line of credit of $30,000 at 10%! We are now in possession of a home worth about $110,000, but morgaged at $114,000 thanks to a more-than-generous mortgage broker appraisal of $123,000. Thankfully we were able to refinance again with a base mortgage of $96,000 at 6.25% and a HELOC of $16,000 at 9%.

Don’t get me wrong – I thankful to have a home and so far we are making the payments. The problem is that even though we are more disciplined financially and things are moving in the right direction. . . we are still walking a dangerous tightrope. It will be interesting to see how then next couple of years play out. I just wish I had become more interested in keeping a close eye on my finances a long time ago.

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