I have mentioned that we are refinancing the house. In fact, it is one of my goals on my Sunday Evening Post. We were paying 6% interest. We are moving down to 4% interest. We are also extending the life of our loan by 8 years. Our monthly payments will go down about $500. This is a good thing.

So why am I having a minor panic attack about the whole process? I think I will blame the appraiser. I know I am not a trained and certified appraiser, but I do follow the housing market, especially in our neighborhood. I know what houses are selling for. I know we have short sales in the neighborhood going for $250k. RealEstate.com guestimates our home value at $245k. That’s too high, I know, but I was still a little unhappy that the appraiser did not look at a single house at over $220k. The appraisal on the house came back at $200k even. We owed $203k.

In order to refinance, we needed to be able to buy ourselves up to 5% equity, so $190k, plus pay all closing costs. In addition, because our initial lender guarantees that they will sell our loan as soon as possible, they follow Fannie Mae rules that say none of the money for closing costs can come from debt.

This means, that in order to close, we have to have $18k, cash. $13k we had in our accounts. The rest is coming from closing probate and transferring the money from the estate account to ours. (I do not even want to talk about the paper trail we had to create to prove that all of this money was ours and that it was not gifts/debt, etc.) But it is pretty much draining all of our savings accounts. We will only have the bare minimum $1k emergency fund remaining. And that freaks me out.

We have made some changes to help us rebuild savings quickly. We have suspended paying the $450 extra we were paying on my undergraduate student loans. We will not have a full mortgage payment due at the February (which creates some savings) and the payments we do have will be $500 less. That lets us start rebuilding savings at a rate of $1k/month, not counting the money that is already budgeted for the savings accounts each month (all of that is being redirected to closing costs in Feb, but will be back in effect in Mar), to cover emergencies, home and car repairs, etc.

Still, I hate having this little in the bank. Part of it is timing. With the water heater overflowing, we really need to get a plumber out to the house. We owe a final payment to the adoption agency for the home study. (We will not owe any more if we adopt from foster care, but will have additional fees if we adopt via infant relinquishment.) And our auto insurance is due in March. Since we pay that every 6 months, it’s not a small bill.

We know that we will get the money that is in our current escrow account back. We will get a rather large IRS refund this year. (I normally try to plan for a small refund, or perhaps owing a little bit, but this year, I won’t complain.) Those facts are keeping me from completely freaking out.

I know that it will only take a few months to rebuild the savings accounts to an amount I am comfortable with. I know that I will definitely like the new monthly budget with the smaller mortgage amount. And I know that we really can afford what we are doing. But I have gotten spoiled by having money in the bank, by having the money to do exactly what we are doing.

In the long run, I know what we are doing is a smart use of our money. It will pay off when it comes time to either sell this house, or to try and buy a second one without selling this one (renting it out instead). I know these things.

But this brief moment where I see all of our savings accounts drained? Yeah, I am having some minor panic attacks.