What do you do when the universe appears to be against all attempts to complete a goal?  Perfect credit, spotless payment record, and 12 years at the same job (proof of ability to pay,) and I never imagined it’d be so impossible to take advantage of the record low interest rates.  But after 2 failed attempts to lower our rate on our mortgage I had to come up with a new plan.

I’m happy to say that our $135,000 mortgage has been our only debt for 4 years.  Our current 5.75% isn’t terrible but it drives me insane knowing rates in the 3% are just out of my grasp.  I feel like I’m throwing money down the drain every month I’m stuck at 5.75%.

Most people think of a mortgage as good debt but I sure don’t.  Debt is debt and I don’t want it!  One goal I have set for myself is to be debt free by 35.  That gives me 9 years to eliminate this debt.  Another goal is to eventually turn this property into a rental property and lowering the monthly cost would help make it more profitable for us.  Refinancing was supposed to help with these goals. But for now I just have to accept that I’ll be paying more in interest each month than I should need to for a few reasons:

  1. Our home appraised at $135,000 late last year.  Since it has no equity no one will even consider letting us refinance.  We could take a huge chunk of our savings to pay it down enough to refinance but being without an emergency fund isn’t a risk I’m willing to take.   Plus, we would still be paying PMI, most likely a higher amount than we are now, so I don’t see the point.
  2. Our loan is not held by Freddie Mac or Fannie Mae so we are not able to take advantage of the HAMP or HARP programs.

My plan now is to make extra payments on the mortgage regularly till I build up enough equity to refinance.  I feel like I’m fighting an upward battle because the housing market where I am is still tanking, so I can only imagine my home value is as well.  At least this plan will keep me on track for accomplishing my debt free by 35 goal.  It’s my only option unless someone just hands me $10,000 (a girl can dream can’t she?)

Readers:  Have you been able to take advantage of these low rates or are you in the same boat as me?  Do you think my plan is solid or should I be doing something else with the money going towards extra payments?