Say it! Say it! Say "I lost the nest-egg." Go on, say it!I wouldn't exactly say the nest-egg is gone, and we definitely didn't lose it. Here's what happened.
-Albert Brooks as David Howard, Lost in America
About 4 months ago, when interest rates dropped dramatically, we tried to refinance our mortgage. Our credit is good (710+) and we had about $75,000 in equity in our home (we thought). The appraisal came back about $30,000 less than when we last refinanced about two years ago, and that put us just outside the 20% equity needed to to refinance at the rate we wanted. We decided it wasn't worth pursuing at that point.
Fast forward to now. The rates dropped again, and we qualified for a new refinance program (what my brother the mortgage guy refers to as "Obama loans") that would get us a 4.875 % for a 30 year fixed loan. We had to get a new appraisal.
According to the new appraisal, our house is worth $45,000 less than it was 4 short months ago. We now have, according to this appraisal, zero equity in our home after living here for 19 years.
Never in the last 20 years have I been so grateful to have a secure government job with a solvent pension fund. We still qualify for the refinance, and that will save us about $200 a month. Other than the anxiety-inducing knowledge that what we had viewed as a nest-egg (about $75,000 in equity) has vanished, it won't create any real impact on our day to day lives for the moment. It does mean, though, that there will be no early retirement. Moving back south any time in the next 5 years is a dead idea now. There will be no more trips to Kentucky to look at farm properties. The compound in all its sprawling, fortified, rural glory will remain a pipe dream for probably another decade. I'm sure that the value of our house will come back, and things will work out.
We explained the situation to our daughters: if MizBubs and I did not have reliable jobs, we would now essentially be one paycheck away from being dead broke. If we needed to relocate, we would walk away from the sale of our home with whatever we had in our checking account and would no longer be able to own a home. Our girls have learned a valuable lesson about the vagaries of our economic system, and I don't think they'll be taking much for granted now.
I am going to bed now to count my blessings.