Unhappy about Necessary Debts

I admit it.  It’s been over a week since I’ve posted.

This past week has been frustrating – and disheartening.

On the positive side – we close on our house in NC on Friday!  That’s nearly $180,000 of debt gone!

However…we have to bring $10,677.82 to closing.  Ouch.  (I did an estimate before and I was way off.  I didn’t include the 2o08 taxes we would owe, the final mortgage interest payment, or the deed and register stamp fees.  All told, that was about another $2000 we have to bring to the table.)

We struggled a lot with how to deal with this.  The closing attorney didn’t get the exact numbers to us until this morning (we knew it’d be between $8000 and $12,000.)  We had already talked to our bank about doing a short term loan until we refinance in a couple weeks (more about that later) but there was no way they’d be able to process the money in time.  After hearing about our situation, both lenders we spoke to though that we should consider doing  a cash advance or using a balance transfer check on our credit cards – because it was the only way we were going to get the money wired to the closing attorney on time to close.

Thankfully, my husband talked to a businessman in our church about our situation and he and his wife offered to lend us the money for the next two weeks.  We’re hoping to have it directly wired from his account to the attorney.  We will be paying all fees, of course, and we want to offer them the interest we would have otherwise paid.  I also told my husband that although there is no way I’d let the debt go unpaid, I wanted to write out a promissory note.  It would make me feel better knowing that they have legal recourse against us if we didn’t pay.  I absolutely hate the thought of borrowing from a friend!

But there’s more:

We not only owe this amount, but by law, all homes sold in our county now have to comply with new septic laws, which means that most people will have to install new septic systems.  We knew this when we purchased the house, and we got quite a bit off the price because of it.  We were expecting our old house to sell with cash to spare, which we would use to pay for the septic.  Unfortunately, the market being what it is, we had to sell for nearly $50,000 less than what we originally asked, so we don’t have the funds we expected to have.  Oh, well!   It’s truly a case of “You win some, you lose some.”

So between the new septic system and the money we need to pay off our old loan, we are going to need about $25,000.  There’s no way around it, and we can’t wait on either.

But here’s where “we won some” – mortgage interest rates are low right now.  We just locked in at 5.65% for a 30 year fixed, which is quite a bit lower than our current 6.875% 7 year ARM.  It will take less than 2 years to break even after the closing costs.

So we plan to refinance, but we will actually be refinancing for more than we owe. We’ll refinance for around $122,000 and take the extra $25,000 to pay for the septic and to pay back our friend.  This will happen as soon as we get the appraisal and the settlement statement for the closing on Friday.  That day we’ll wire the money we owe back to our friend and stick the rest in savings until the septic company bills us.

Not the ideal.  I hate adding more debt, but I knew this was coming.  Still, it’s disheartening.  It’s just more debt.   It will also raise our mortgage payment to about $900 a month, which will make things a little tighter.  Thankfully, we are close to getting another card paid off, which I’ll post about soon in my January Progress Post – 5 days late!

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One Response

  1. […] required expenses we have to pay immediately that range in the tens of thousands of dollars – our upgraded septic system, and the amount we still owed on our North Carolina mortgage when we closed last Friday.  When we […]

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