Tale of Two F.I.'s

Long time readers may remember when I purchased The Homestead.  First came the number crunching… Could I afford it as a single girl?  Then came the news… The cute little bungalow was mine!  Over the years, I’ve shared various trials, tribulations, and projects going on.  It’s hard to believe I’ll have been at The Homestead for five years this fall!

What’s my latest news??  Let me start at the beginning.  I bought The Homestead in 2007.  Shortly thereafter, the housing market crashed and financial institutions (F.I.’s) tightened their credit belts.  The economy continued a downward spiral.  Then in 2010, my employer cut my hours which resulted in a 20% pay cut.  A month later, said employer was acquired by a larger firm and I still have not recovered the lost hours.

Two months ago, I decided to see if I could qualify for mortgage refinancing despite my part time employment status and the possibility of not having enough equity built up.

F.I. #1 

I saw on TV how one of the credit unions was offering a 3% fixed rate refi, so I got dressed up all business-like and went to the CU with my financial statements.  The "loan officer" proceeded to tell me that they don't really give the loans.  He admitted they just process the loans for another larger bank, the rate was at 3.25%, and closing costs would be $2-3K.  He then gave me paperwork to take home to fill out. 

After he told me where the loans were actually from, I asked him:  "What's the benefit of using your CU as opposed to going to the other bank?"  He stammered a bit and finally said: "Not much." and that was the end of the conversation.  Apparently not many people ask that question, lol.  I walked out of the CU thinking, “What a putz!”

F.I. #2 

As soon as I got back into my car, I texted the BF to look up the nearest bank locations (He's got one of those smartphones, lucky guy).  Turns out there are five in the area, so I drove to the nearest one.  Totally different experience than at the CU.  The loan officer took down a bunch of preliminary information for a quick loan app and said he'd get back to me by the end of the day.  He also told me rates just dropped to 3% and closing costs would be around $1000. Hmmm, from the time it took me to drive from one FI to another, it dropped .25%?  And why were CC almost half of what the CU quoted? 

The loan officer did get back to me by the end of the day... I was approved!  Not only was my application approved, I didn’t need an appraisal (saved me $400 in closing costs), no PMI was required, and no escrows either!  He admitted how excited he was about my mortgage deal.

On several occasions he told me the deal could be wrapped up before I went on vacation (to the retreat in Colorado).  Never happened.  Then he said it would be done by the end of June.  Never happened.  As personable as the loan officer was, I have to admit that I am less than pleased with the customer service.  I closed on the refi last week.  Finally!

The Results:

•  I cut my interest rate by 55%, FIFTY-FIVE PERCENT!  Thus saving me over $53,000 in interest costs over the term of the loan.

•  I cut the term of my loan by 11 years and the monthly payment amount by $20.

•  I’ve always paid a little extra each month, so if I continue to do that I can pay my loan off in 12 years instead of 15.
•  According to my calculations, I should recoup the closing costs in 10 months. Woo Hoo!

I'm not in the same league as Mark Zuckerberg who recently refinanced his home at 1%, but I'm happy with the 3% fixed rate I got.