Refi Complete

This week, we added another life achievement that makes me feel old: refinancing our mortgage. We started thinking about it several weeks ago, as I discussed here, and finally closed on Tuesday. Here are the details for those who are interested.

Early on, I requested information from a couple of lenders online and never heard from them, which didn’t bode well for their responsiveness if I’d actually applied with them. So I moved on. I applied online first with a mortgage officer recommended by our realtor. The site walked me through a detailed application process that took some time. Then I waited. And waited. Long story short, the loan officer was so busy with mortgages for new purchases that she had to put refis on the back burner. Each time I contacted her, she didn’t respond for a couple of days.

So I moved on again to another loan officer, Marla Butler at Guild Mortgage in McKinney. My buddies from work highly recommended her and said she was very quick to respond. They were absolutely right. Except for one phone call I made to her right before getting the cashier’s check for closing, we communicated only by email, and she always wrote me back within a few hours or the next morning if I sent her a question. She was great to work with.

We started the whole process with Guild about a month ago, applying online and then faxing in our documentation. Overall, the process went smoothly, with only minor issues regarding my legal name (everyone wants to leave off the Jr.) and getting the correct numbers and financial statements where they needed to be.

As planned, we switched to a 15-year mortgage and got an interest rate of 3.125 percent, a big improvement over our 30-year mortgage at 4.375. If we take the full 15 years to pay off the new one, we’ll save over $70,000 in interest compared to the old mortgage. Our payment only increased by $175/month despite the shorter term. Closing costs totaled about $4400, so I figure this was one of the better investments I’ve made. I saw lower closing costs elsewhere, including the first loan officer I contacted, but Marla was so great to work with that I was willing to pay a little more to get the deal done quickly and efficiently.

One thing that still seems odd to me is the way underwriters look at financial data. They base their decisions on periodic financial statements and values like a financial accountant, which means their numbers could be several days or even a few weeks out of date. I, on the other hand, use and my various financial websites to track my positions in nearly real time. Both perspectives have merit, but it’s helpful to be aware of the difference when applying.

The biggest hiccup, if you can call it that, was the appraisal. To avoid PMI, we needed the house to appraise for several thousand dollars more than we paid for it. Based on the improvements we’ve made and the current listings in our neighborhood, I expected a high value. Instead, the appraiser valued our house at $3000 less than we paid for it. As a result, we had to pay down our original mortgage significantly at closing. We were hoping to use those funds for other purposes, but it was money we would have to pay at some point regardless, so we benefited regardless.

I hope this helps. Comment or write me privately if you have any questions.