Friday, February 01, 2008

The Refinance Insurance Policy (update on the refi)

The rate was locked on Wednesday and my paperwork is all in and accounted for. I just have to wait for our virtual "closing". (closing by phone - sounds like)

We were offered so many choices and so many variations of those choices. I wanted to stay with the bank we are currently doing business with. We might have been given better rates, but I felt more comfortable sticking with the same company.

What we chose to do was:
Keep the original loan at 5.99% -no changes made
Refinance the HELOC and LOCK it at 8.90%
No Appraisal Fee
No Pre Payment Penalty
No Closing Costs.
15 year loan

Basically it's the same APR and monthly payment as I'm paying now but it's over a little longer stretch and it's NOT ON A VARIABLE!

A lot of my options involved refinancing the whole thing together in which either my APR went up plus I had closing costs or the APR went down BY A HAIR and I had closing costs. This might not be the best route for everyone. I felt it was a good insurance policy for us against an uncertain future of the economy. I will sleep better knowing that the $30k is on a fixed rate for the 15 years and that it's being moved into BS6 where it belongs!!!


Jennifer said...

Just wondering why you felt so strongly about sticking with the same mortgage company? We are looking into refinancing to a 15 year mortgage at 4.99% with no points and no closing costs.

Wendy said...

I guess it gets complicated.

I don't have a mortgage at all as it winds up. I have a home equity loan for the brunt of my balance at a low APR and a HELOC.

Because of some stupid choices I've made (thinking it was in the best interest of getting out of debt) the amount due on our house is over what the original sale of the house was (even after paying on it for 4 years).

With a 90% loan to value my APR goes up and I get a PMI. So I decided just to just refinance the variabled HELOC. Doing so dropped rates to a manageable 6.1 on the variable! I don't want them to jump up on me again like the last time so I am "locking" the HELOC which makes the rate go up again because it turns into a loan which leads me to the 8.9. BUT it's over 15 years and it will never climb which is SAFER situation than I am currently in.

The original question: Why do I feel strongly about staying with the same company?

Probably more stupid tax for me to talk about later. I wanted quick and easy. Like I said, what I was doing probably wouldn't work for everyone.