Back in April, I wrote about why we weren’t refinancing– we’re not eligible for HARP, we were very likely underwater in our home, and we could afford the mortgage payments without hardship.

Well, today, about 90 minutes before this posts, we will be having a phone conversation with a mortgage broker and likely starting the refinancing process. Why? What’s changed?

Well, we’re still not eligible for HARP, and we can still afford our mortgage payments with no problems. However, the market in our neighborhood has picked up substantially. While Zillow.com still says we’re about $30k underwater on our mortgage, RealEstate.com says we have $40k in equity. Zillow is supposed to be better in the Seattle market, but I don’t think it’s algorithms can take short sales and bank owned properties into consideration. Every house in our neighborhood that is for sale has a Zillow estimate of about $30k less than the asking price. So if nothing else, we should at least not be under water. And it’s possible that we have 18% equity in our home.

But the biggest change is us, and what we’re looking at. We have a lot of things going on right now, including considering whether or not we will move away for C to go to graduate school, or if we want to buy a second house in the Seattle area. And if we don’t buy a second house, and move, we then might want to buy a house wherever we move to, as graduate school should take around 7 years.

We aren’t afraid of PMI anymore, if it means our overall loan payment is lower and therefore our debt to income ration is lower. Plus, the mortgage broker we’re looking at offers lender paid PMI- which means our interest rate is slightly higher, but we’re not the ones making the PMI payments. And that slightly higher interest rate is still substantially below the 6% we’re paying now.

Plus, depending on what the appraisal on our house came back at, we could conceivably buy ourselves up to 20% equity with the cash we have on hand and not have to worry about that at all. Of course, that appraisal is right now our biggest stumbling block. Without knowing what it will come in at (and even a $40k swing is pretty huge), we don’t know exactly what our options are. Luckily, the broker has provided us with 4 different scenarios to at least give us an idea.

So that’s the immediate plan. We will refinance the house. We will have lower mortgage payments. We may very well keep paying the same amount each month as we do now, but it means that we will have the option of paying $400 less/month on the mortgage. (Worst case scenario, and yes, we know that part of that savings comes from extending our mortgage out 8 more years than it’s currently at.) $400/month  gives us a lot of options.

It’s only been 9 months since I wrote we weren’t going to do this. Nine months is not a long time, and yet, so much can change. I love making plans, and having an idea of where things are going to go long term, but I try to never close myself off to anything, or lock myself into one specific plan. Because life changes, we change, and it’s important to allow ourselves the wiggle room to do so.