Tuesday, June 1, 2010

Door A, B, or C???

I hate tough decisions!  I really wish I didn't have to make them.  Life would be so much less stressful if someone else told me what to do.  Now I realize that this is not actually feasible and wouldn't be much of a life but it sure sounds nice.

Kevin and I have been trying to make a decision about our house.  When got a very good deal when we purchased our home so it has increased in value substantially.  We have quite a bit of equity in our home.  Interest rates are very low right now.  Much lower than the rate we have so we're debating a few options.  Four to be exact...A. refinance our remaining balance for 30 years decreasing our interest rate by 1.5% and lowering our payment by over $100.  This saves $34,000 in interest over the life of the loan.  B. refinance our remaining balance for 15 years decreasing our rate by 1.75% and raising our payment $81.  Choice A and B have almost no refinancing fees.  This saves just under $80,000 in interest over the life of the loan.  C. refinancing with a home equity loan.  It would lower the rate but increase our loan amount and give us a nice amount of cash to remodel our kitchen, add a desk area, and possibly covered back porch.  This option will increase our loan but give us the exact same payment as we currently make.  Our loan would still be well below a possible sale price for our home.  This choice requires substantial closing costs.  D. We could put our house for sale and put the equity down on a new home on the other side of town.  For this option minus the down payment, we would be financing about $25,000-$30,000 more than our current home loan.

Option D has it's pros and cons.  Pros: More square footage.  Closer to everything including shopping, restaurants, entertainment, my brother and parent's new home.  The best schools in town, nicer neighborhoods, growing home values.  Cons: Higher taxes. We would almost have to double our current purchase price to find what we want and it might not have as nice finishes as the improvements we have made in our current home.  We currently live on just over a half an acre lot in what many call a "retirement" neighborhood.  On the other side of town we would be looking at half as much room at the absolute best-this is good and bad...less mowing...less parking...).  I really do like my home but my biggest complaint that cannot be remedied is the size of the tiny current office/future nursery (9' 7'' X 10' 4'') and it's closet.  It is "landlocked" by the design of our house and cannot be made bigger.

I could go on for days debating pros and cons but there doesn't seem to a clear choice.  Part of me wants to keep our loan as low as possible for the slim hope that I might someday be able to stay at home with our baby but the other side of me says that I will have to work forever anyway because we need insurance and I should just give in and get a bigger home that I could enjoy.  Every night when I pray for our baby, I also pray for god's guidance.  I do not feel one clear path to any choice which makes me want to just not do anything.  If we sit and do nothing then we may have missed a fantastic chance with low rates.  Like I said...I hate hard decisions...sometimes knowing so much about financing due to my business degree feels more like a curse than a blessing.  I think writing my thoughts down has helped me sort my thoughts a little but I'm not really any closer to a decision.  Any suggestions?  Hmmm...well until we meet again...