Thursday, June 18, 2009


I finally got around to looking in to refinancing the house. I've been meaning to since February, and had been hearing that the markets were getting better and better (or worse and worse - but better if you are refinancing). So here the first week of May or so, I finally got around to starting the process. I don't know why I chose that day - I just woke up with a sense of urgency that I needed to get it done.
I started by calling a bank here in town that was recommended by a friend. The loan officer I talked to really pushed an FHA loan, and said that was our best option. I wasn't really comfortable with the idea of a government-sponsored loan, so I told her I'd talk to my husband and we'd discuss it.
I thought about calling other banks in town, but I knew that the loan wouldn't stay with them - we'd sign the papers there, but the loan would be sold before our signature was even on the line. So I got on Lending Tree. I've heard their commercials. So I filled out their form and within the day, 5 different companies had called. (I was very happy with the Lending Tree experience.)
Two only recommended FHA loans. One said we wouldn't be able to refinance, based on some new law (which I figured was not true, else there would not be so many companies trying to get people to refinance), and two had good, very similar offers.
We spent a week asking questions, nailing things down, and trying to decide which company to go with. As I'd provide them with more information, they'd tweak the quote they'd given us. We finally decided to go with a somewhat local company - one in Overland Park.
I called the man the next Monday and he sent us papers to sign to lock in the offer, and ordered our appraisal.
We had our house appraised. I was kind of shocked at the amount of inspection that ISN'T involved in that process. Basically the guy showed up, walked around the house, measured the outside, and came in and peeked at all the rooms, and asked about the age of the heater and air conditioner. He didn't look at the shed, or the basement. And we paid him $425 to do that. (Maybe I should get into that profession!) Our loan officer said a lot of the information - square footage of the rooms, etc can be found in property records. Still......
The appraisal came in for $15,000 more than I was hoping for - a total blessing. (So I really can't badmouth the appraiser too much.) I was hoping for $5,000 more than we paid for it - so it came out that it was $20,000 more than we paid for it - I was giddy. Because of this, the loan-to-value of our house was much better, and we'd be able to get rid of the stupid PMI we'd been paying.
If you don't know what PMI is, basically it's a rape-you-for-all-they-can-get fee. You pay "x" amount every month, so the mortgage company is "protected" if you stop making your payments. You know, because being able to take your house when you stop making payments isn't enough.
So our savings came up to $160 a month. I was ecstatic - I'd been hoping for $100 a month, and this was so much better - a definite answer to prayer.
Well, this is when I found out that by the time I got the papers back to the loan officer, the interest rate had risen from the 4.875% quote he'd given us to 5.25% (in a two-day span). He figured it would go back down, but by the next week it still hadn't. He waited another week and it was up even more. (I don't blame the man for not getting it locked in - he couldn't have done it without our paperwork.) He finally got a quote, but it only saved us $70 a month (which is better), but had twice the closing costs.
We did some comparing and we found we could save that amount by staying with our current company, and getting them to drop the PMI. And this way there'd be no closing costs.
So I called Bank of America (who aquired Countrywide, which is where our loan is/was). The lady I spoke to said that would be no problem since we had 20% equity, that they'd send out a letter detailing what action to take.
I got the letter yesterday, and it said, "Sorry, but we can't fulfill your request at this time." They need 25% equity.
I cried. I was SO frustrated!
The reason for the frustration is this: when we signed the loan, they told us that with two years of good payments, we'd be able to drop the PMI. Two years came, and we were a month and a half ahead on our payements (I'd call that being good on our payments), so I called to see if we could drop it. They told us that we had to have 20% equity in our house. So we have 20% equity. And now they tell us we have to have 25%. So, when we get that amount, what will they change it to???
See why I hate Bank of America/Countrywide? Not to mention they are the first company that recieved the bailout money, putting us into this economic mess we're in.
I'm also frustrated with myself. Had I gotten on the ball and started this process earlier - even just a few days earlier, or not dallied as long making a decision.... We'd have been saving so much more money. I thought I was being responsible by weighing my decisions carefully.
We entrusted everything to God's hands, so we know He has a better plan than anything we can come up with on our own. Just sometimes I wonder how things like this AREN'T in His plans.... Wouldn't it have been good stewardship to be able to save the money and pay ahead on our mortgage?
But His ways are higher than mine.


CoachingByPeter said...

If a good real estate agent can help grease the wheels and get your offer in front of a lender, you can get an answer more quickly, and potentially close more deals.

Doug or Janice Rhodes said...

We were told that we have to have 80% of the loan paid before getting rid of the PMI..... I think someone is giving you a run around big time. The only problem with the appraisal is that your taxes may go up. Ours did this year.