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To refinance or not to refinance

July 14th, 2012 at 07:16 am

Our initial mortgages (yes, 's' as in more than one) was taken when we bought our house in October 2006, and consisted of:
*the main mortgage (80%), a 30-year at 6.375%
*a piggyback, amortized over 30 years, but a payout after 10 (or was it 15?) years. Rate: 8.125%.

In August 2010, we refinanced. The goals were:
(1) lower our payment
(2) lower out rate, and
(3) consolidate both loans into one.
In 2010, both (1) and (2) were reasonable wishes. However, (3) depended on the 80% home-ownership holy grail.
Fortunately for us, the appraiser came up with a value on our house that made us reach the 80%. What a sigh of relieve when I got that phone call!
So we refinanced, another 30-year at 4.75% this time. We are "saving" over $300 a month, but that means we've also added 2 years to the amount of time we'll be paying for this loan.

Now is July 2012, and rates are even lower than what they were 2 years ago. This time, there are 2 goals:
(1) lower our rate
(2) lower the loan period to 20, or, if at all possible, 15 years.
I've made a few calls, and both should be possible. I was quoted 3.625% for a 20-year.

The downside: payment would go up (about $150). But, we're at a place were we can afford that extra payment. So, is it worth it?

Heck yeah!
Ever heard "the more you spend, the more you save"?
It drives me nuts when I hear this in commercials, because it's just stupid to suggest to people that "the more they spend, the more they save". No! The more you spend, the more you spend. Period.
In this case, however, it would mean that over the period of 20 years, we would truly save over $100,000 in interest. I don't know about you, but that's not money I can just turn my nose up at.

But are you planning on staying in the house for 20 years? you're asking (yes, I can hear you).
Maybe not, but here's the kicker:
*30-year at 4.75%:
Principal paid to start is around $300. After almost 2 years, we're paying $350 towards principal
*20-year at 3.625%:
Principal paid to start is $720. That's $720 that's going towards equity and not in the bank's pocket.
Or put in other terms: I'm building equity in my house twice as fast.

Next step: call my mortgage officer to schedule a new appraisal.

ABN AMRO sucks

March 1st, 2007 at 03:50 pm

Ok, I'm over-reacting a little, but here's the story:
I sent my mortgage payment with an extra $22.68 to go to our principal. First of all, it's the second months in a row I have to call them because they put extra payments in the escrow account vs. principal. Even though I had called prior and made sure that any and all extra would go toward principal, but anyway...

I sent the payment on 2/20 and called on 2/21 to rectify the mistake. On Friday 2/23, I see that nothing has changed so I write to customer service and get a response back saying this will be fixed.

My payment is due 3/1 and this is the part I'm over-reacting about because we're talking about a tiny amount of money: they applied my extra payment toward NEXT MONTH, which made means that I will pay a whole $1 or so extra in interest.

It's no so much the amount that bothers me (after all, we are talking about $1!!), but it's more that first of all, I've had to call many times, and write in order to get this done. I had called once, before making my very first payment, and was told that any extra payment were, by default, credited to the principal, which is apparently not true.

Second is that when I did this last month, the money was moved from escrow to principal right away. This time, it feels like they waited until my normal payment was due (3/1) and then fixed it so it would be credited to the principal after 3/1.

This means that on a one-person scale (me), it is $1, but what if they do this to a hundreds of thousands of customers every months. It does add up for them!

Wow... Water bill

February 10th, 2007 at 12:08 pm

We got our first water bill a few days ago: $103.41 for 69 days. 10% discount if paid before 02/26.

This is my first ever water bill, so I didn't bother to really look at it. And then today, I did take a closer look:

Rate Information:
Water $4.06 per 100 CF
Sewer $7.43 per 100 CF

We used 900 CF, or 6732 gallons. This seems like a lo-oot of money. So I look around and find out what other Massachusetts cities are charging for water/sewer:
Rate for Shrewsbury, MA:
Min. charge $ 16.50/qtr. (5,000 gallons)
5,001 to 25,000 gallons $ 2.85/1000 gallons

At that rate, we would have paid:
16.50 + 4.94 = $21.44

Ok, so Shrewsbury is in no way the reference here. I just happen to find that particular information quickly. But this is still a huge difference.

Can I get feedback from you guys? What does your water bill look like?

Our first mortgage payment...

November 13th, 2006 at 06:11 pm

... will be paid on 11/17, (due 12/01). Strangely, it feels good. It also made me realize we'll be overbudget this month. I've known that payment was due on 12/01, but for some reason, didn't bother to include it in the monthly budget. I though "Oh great, we don't have mortgage payment due until Dec. 1st, let's send super duper mega payments to all the credit cards, and car loan this month". Tonight I'm thinking that wasn't such a great idea. We'll get over it, we have little (tiny) cushion, but we'll have to be careful from now on.

Biggest check I've ever written... and a little surprise

October 30th, 2006 at 07:05 pm

So we closed on the house we just moved in on Thursday (October 26th). I had to give a little over $20k to our lawyer. Ouch! That's the biggest amount I've ever had to give at one time. But it's definitely worth it.

DH is already making a list of EVERYTHING we have to buy. Sure... why not? Let's go crazy and spend the little bit we have left.

Oh yeah... I forgot. 36 hours before we were supposed to close, my mortgage broker calls and tells us we have to add an extra $5k to our down payment. WHAT?!?! And why is that? Well, since the last time our credit reports were checked (May) and now, we apparently have extra minimum payments on credit cards, which will bring our income/debt ratio a little above 45%. That is the lender's limit apparently. To bring that ratio down under 45%, we have to add $5k. hhmm!! They've had our loan application for over 2 weeks, you'd think they would have bothered to do a credit check before that... nah!

The point that made me tick was when she said: "well, they've looked at your bank statement, and they know you have the funds"...!!!!!!!!!!!! So what? we have the "extra" money so they'll just ask for it? What if we didn't have it? What if we had $10k or $20k "extra"? Would they had asked for that then? That's just not right.

Our real estate agent told us this was predatory lending and that we should report them... I don't know what to think. It's not like the money has vanished, it's more equity already in the house, but I don't think I'll do business with these guys again in the future.


October 22nd, 2006 at 02:58 pm

I hate moving. I never really liked the place we've lived in for the past 4 1/2 years, but I knew that the next move was going to be on our home. That's why I didn't want to find another appartment. I just didn't know when that was going to be.

Well, we are almost all packed. It wasn't as painful as I though it would be. There are still a few things here and there, but we ran out of boxes this afternoon, so we had to stop. Kitchen is still a bit of a mess, as is the bedroom.

Moving date is Friday!!! I can't wait...

First down payments went through

October 11th, 2006 at 08:00 am

Ouch! I knew they were going to come out of my account one of those days, but seeing
Debit $9,500
Debit $ 500
In my online statement hurt a little. plus the $5,000 for e-loan - which isn't money lost, I know. But it's a lot of money out of my checking and savings at once.