ARM or Fixed- You Make the Choice- We Have

Ever since going through Dave Ramsey's Financial Peace University, Scott and I have been making positive financial decisions in our life. I did all of this in an effort to understand more about investing, debt, insurance, mortgages, credit, etc. I signed up for a 13 week course held at a local church in town. The classes were 2 hours every Sunday evening. Because Sundays are Scott's biggest work day, he opted not to join me, but commited to listen to the material on CD at home during the week.

Each week I learned a new topic, and completed homework during the week. Scott and I established a budget, looked at credit scores, our homeowners/auto/life insurance policies, retirement investing (or lack of), and started paying down debt with a vengenence.

One of the areas we have been looking at for awhile was our 30-year morgtage that Scott took out 5 1/2 years ago. It has a period of 7 fixed years, and then turns into an ARM (adjustable rate mortgage) for the remaining 23 years. Dave Ramsey advocates fixed rate mortgages, and only 15 years- citing how little the principle balance goes down in the first several years and the vast difference in interest paid between a 15-year and a 30-year.

With recent events this summer at Scott's workplace, we've been feeling like our time here is far from over. Therefore we took the plunge (when rates plunged) and refinanced our home. With the increased value in our home, we got rid of the PMI (principle mortgage insurance) payment we'd been paying each month. We also took our 30-year loan down to 15-years. And even though I don't see us living here another 15 years, we do feel like we could be here another 5, and we'll have much more equity built up when/if we do sell it and move. The best part is it only increased our monthly payments by $180 (not counting closing costs).

If only Scott would have been able to get a 15-year mortgage when he first had the home built! But better late than never.