This was originally released by Inman on April 14, 2026.
I purchased a home with a 7.35% rate in 2024. Refinancing the rate down to 6.2% the next year made the home mortgage math simpler to swallow.
When I moved from Seattle to Santa Barbara, CA 18 months back, I knew it was a bad monetary choice. However it was an excellent life decision.
My husband and I wished to raise our kids in Santa Barbara. I had actually gone to UCSB and lived there for another stint in my mid-twenties; I describe living there as a permanent holiday that’s disrupted by work; it’s building sandcastles in January and strolling the kids to school every day of the year.
The only challenge: sky-high housing costs. For Oprah or people who occur to be British royalty, the cost of purchasing a home is pocket modification. For the rest of us, it’s an obstacle. Santa Barbara is among the most costly cities in the U.S., with a median home-sale cost of nearly $2 million. And Goleta, the small city surrounding to Santa Barbara that’s home to a number of the location’s non-celebrities, is nearly as costly.
Obviously, homes in Seattle, where we were living previously, aren’t exactly cheap. Amazon + Microsoft + tech workers with stock options = high prices. The normal home in Seattle chooses almost $900,000. My husband and I owned a home in Mill Creek, a Seattle suburb.
We had purchased the Mill Creek home for $777,000 in 2020, the middle of the pandemic homebuying boom, with a 2.9% mortgage rate. Our monthly home loan payment was $3,800, much lower than it would have been with today’s 6%-plus rates.
Relocating To California Doubled Our Home Mortgage Payment
We were prime candidates to stay put in that Seattle-area house permanently, secured by a low mortgage rate. But we wanted our kids’ hometown to be based upon where we ‘d be happiest, not on the economy.
So in early 2024, when rates were around 6.9%, we offered. Our sites were set on transferring to Santa Barbara before our son began TK (one financial benefit of California: complimentary pre-K for all 4-year-olds). We offered our Mill Creek home for $1,450,000; we were fortunate that home values had actually skyrocketed.
That equity allowed us to pay for a home in the Santa Barbara area when typical rates were nearly 7%. Among my BFFs, a regional agent, discovered us a small, off-market fixer-upper in Goleta near to a desirable elementary school. It was a total gut task; the house had not been renovated given that it was integrated in 1960, and it came total with pink and green shag carpets. Still: the sellers desired $1.5 million.
Our Original Home Loan: 30 Years, 7.35%, $8,500 Each month
We worked out the price to $1,324,000 due to the fact that the examination, as anticipated, revealed a lot of problems. That was still a wild price for a somewhat cottage with a broken foundation, 40-year-old home appliances, and a rotten avocado tree. But: It was our extremely own house in Santa Barbara. Worth it.
We closed in April 2024 with a regular monthly payment of $8,500. We put down 20% utilizing the equity from our Seattle-area sale. The very best 30-year rate we might get was 7.35%; we took it with an eye toward eventually re-financing.
We likewise paid roughly $200,000 to renovate your house (also utilizing profits from our previous home sale), dumping the green shag carpet and making it habitable for our family. We were fortunate that my father-in-law and spouse could do practically all the labor themselves.
We relocated September 2024, just in time for our son to begin TK. Santa Barbara is warm and vibrant and neighborly and there’s always saltwater in the air. We walk our kids to school every early morning, we boogie board, and seeing their baseball games is a sun-soaked sideline celebration.
The only thing our kids grumble about is going to the beach and swimming pool frequently. The only thing the adults complain about: our home mortgage payment. We make tradeoffs to live here: a strict no-nail-salon policy, for instance.
Our Refinanced Mortgage: 20 Years, 6.2%, $8,800 Each Month (and $300,000 in Overall Cost Savings)
By September 2025, rates had actually declined to 6.3%. Plus, I ‘d enhanced my credit history by taking the extremely adult actions of 1) purchasing a bunch of things with my charge card and paying it off immediately, and 2) including my name to my dad’s credit card (credit history aren’t fair).
Our mortgage had a balance of $1,042,000. Changing to a 6.3% rate from a 7.35% rate would bring our regular monthly payment to about $7,700. However then we computed just how much interest we would pay throughout our 30-year loan. It came out to nearly $1 million on a home we purchased for $1,324,000. Utilizing a 30-year home loan almost doubled our housing expenses, so we investigated a 20-year home mortgage.
We had 2 options:
One, re-finance into a brand-new 30-year home mortgage with a 6.3% rate, pay $7,700 per month, and pay about $1 million in interest over three decades.
2, refinance into a 20-year home loan with a 6.2% rate, pay $8,800 monthly ($300 more than our previous payment), and pay about $700,000 in interest over two decades.
Choice 2 meant we ‘d own the house totally free and clear 10 years faster, and conserve about $300,000 in interest, which could pay for … about half of an apartment in Santa Barbara. However $300,000 is more than no.
We chose alternative 2, the 20-year home mortgage. The expense to re-finance was $12,000, which we rolled into the loan. If rates drop again, we’ll re-finance once again.
Refinancing often makes monetary sense, even when rates aren’t plummeting. I will not argue that buying a small fixer-upper for nearly $1.5 million makes monetary sense, and now we’ll own the house totally free and clear in 2045 instead of 2055. And: we get to live rich lives. Not abundant with money, of course, due to the fact that lots of that goes to our mortgage. Rather, it’s abundant with Santa Barbara vibes.