Jan 28, 2009

Update on our refi: We closed yesterday at 4.875%

We finally signed the closing documents for the refinance on our mortgage yesterday. After fees, the math works out to an APR of just over 5%, and of course, APR is what really matters when it comes to figuring out our savings. We plan on staying in our house forever, and to continue paying the same amount that we do now, so the benefits of our refi will be substantial. We'll save over $30,000 in interest and pay off our mortgage in 2031, two years earlier than our current payoff date in 2033.

It must be awful for the escrow company's notary to have an attorney come in to sign closing documents. I read every sheet of paper and questioned multiple figures. I also questioned a couple of whole documents, including one that was completely irrelevant that we didn't have to sign. It was an IRS form permitting the mortgage company to obtain copies of our tax returns – the form itself said something like "If completing form for a third party, do not sign if Lines 6 and 9 are blank" and of course, Lines 6 and 9 were blank. The notary had to call the lender, who said, "Oops, they don't need to sign that." I'd like to think nothing bad would have happened even if we'd signed it without reading it, but I hate to think of all the people who have given lenders permission to obtain their tax returns when it wasn't necessary.

Finally, while we plan on paying extra on the principal every month, I must admit that a tiny part of me is glad to have the reduced monthly payment – just in case something bad happens and suddenly that $200 monthly difference becomes significant.

Now I just have to update our list of accounts.


Anonymous said...

Congrats! We just did the same thing and dropped about $250/month - going from a home equity at 8.375% and a mortgage at 6% to a single new mortgage at 4.875%. I still have yet to update our lists, too. Way too many other things going on right now...

Mommy Shoes said...

I drove our closing agents nuts because I read every single word of the mortgage contract and I wasn't even on it. I questioned everything and made them make repeated calls for explanations. It drives me nuts that they don't know what they are asking for. We are currently in the process of looking to refi so I can only imagine what it will be like this time around. Congrats to you on a lower payment.

Anonymous said...

I am so glad to know that there are people out there who read their paperwork! I don't handle mortgages, but I do work on home equity loans, and it blows me away the number of people who simply want me to point them where they need to sign and that's it. They tell me not to even bother explaining it. I don't know how people can be so cavalier with stuff like that, but I can't do that to my members, being the responsible banker that I am. I politely tell them I am obligated to explain, at least briefly what the document is they are signing.

Congrats on your lower payment! That always feels good!

sherri said...

Congratulations! We're having a tough time trying to find a lender who will accept out application. We have exceptional credit and only need to refi $75K but it seems everyone is clamoring for refis or there aren't enough application agents due to mortgage company layoffs.

Tacky question but one that's been om my mind lately, what did your closing costs look like? Did you have significant loan origination fees? Have to pay points to get the rate you wanted? What lender did you choose? Thanks for any info you feel comfortable enough to share.

Kim said...

I'm probably not in your state so your laws may be different but the notary was probably a paralegal.

As a notary, I don't care what the form says. All I am there to do is verify that you are who you say you are and that you actually signed the document.

Great job on the re-fi!

Lisa said...

I'm glad to know I'm not alone in reading the documents, but I'm not an attorney. We had to sign the IRS form and lines 6 and 9 were blank on ours too. The reaction was interesting when I questioned that.
Congratulations on getting such a great rate! We just bought this summer and were able to get a loan at 6%, so it's not really beneficial to refi right now.

Chief Family Officer said...

Thanks for the kind words, everyone!

@Caveman - Yeah, the list is still on my list at the moment ... MUST get to it asap!

@Sherri - Our total closing costs were about $6K but that includes the Feb. payment on the old mortgage. The costs are on the high side, but made up for by the extra low rate we were able to get via the special program we were eligible for. On the day we got 4.875%, the national average was 5 point something. Hope that helps.

@Kim - You're right, I'm sure the notary was more than just a notary.

Father Sez said...

Congratulations, CFO.

In our part of the world, we are still at around 6.2 - 6.5%. And this is after the Central Bank dropped their rates by .75% recently.

We are expecting more rate cuts and maybe we will also get the lower rates soon.

We can all do with some savings.