December 17

The thing I am looking forward to in 2020 more than anything is the day, I believe it is April 1st, when my mortgage rate resets. I know, most people would hope for a new job or a promotion or meeting a new love interest, but none of those things will happen for me. Instead, I look forward to the day the mortgage company that holds my note has to recalculate what I pay it each month. 

A bit of background ... When I got divorced I had to refinance my mortgage. We could have sold the house but to do so would have dragged out the living together (not ideal) and also would have resulted in our eating all the equity we had in the house. We bought at the top of the market, but put down 20 percent, so even though we got divorced in the teeth of the recession, we were not underwater. Rather, the outstanding debt was about what the house appraised for. So I took the gamble of keeping the house and hoping things would rebound and I could also swing it financially long enough for that to happen. 

So, I refinanced, but since there was now no equity and I basically had no extra money, I had to get an adjustable-rate mortgage. ARMs lock you in at a lower interest rate for a set period of time and then resets (typically once a year) after the initial rate period is over. I got a 5-year ARM. In other words, for five years, the interest rate was really low and then it resets once a year for the rest of the term. I have been lucky, both because interest rates have remained low (this year was the first one when the interest rate was above 4%) and between raises at work, finishing alimony, and being frugal, I have been able to stay in the house for almost 10 years. 

I took almost the entire inheritance-out-of-nowhere I received earlier this year and paid down about 40 percent of the remaining principal on the loan. By my calculation, when my ARM resets in April (which will also likely go down if the interest rate it's based on stays around where it is), I will save somewhere between $500 and $600 a month. It is the equivalent to a roughly $10,000 raise which is not nothing for me. 

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