In January, I contacted my mortgage specialist and found out what my refinancing options were. I decided to go with a No Cost 30 Year Fixed Rate loan at 4.25% which will lower my monthly payment by about $260 - woo-hoo!
It's called "No Cost" because you accept a slightly higher rate in return for the the closing costs of the loan being paid by the bank. However it's not completely "no cost" - you have to pay for an appraisal ($475) and I temporarily had to deposit $2000 into my new escrow account until my current lender sends me a check for what I currently have in escrow and essentially pays me back.
As mentioned, I had to get an appraisal in order to refinance, so I got that ball rolling in late February. I was a little nervous because appraisals have not been that great lately and many homes are getting appriased below their value. The fact that my house is a short sale and I bought it for cheap (by California standards) made me slightly less nervous because I couldn't imagine them appraising it below what I paid. I don't know why, but I feel weird about writing what I paid for my house online, so sorry folks.
My appraisal came back (eventually...there was some drama and a redo) and it was appraised at $25,000 above what I paid for it which made me happy (I've put about $16k into improvements so I would have liked to see a little higher than that). I think my house is worth more than what that final appraisal is, but I'm not trying to sell right now so I was just stoked it wasn't below what I paid which is what other people are experiencing. But I already told you it was cheap, so I really have nothing to complain about.
Refinance Bonuses
So besides getting a lower mortgage rate and dropping my monthly payment, because of my house being appriased for more than I paid for it, I now officially own enough of my home to not have to pay mortgage insurance every month. Second Woo-hoo of this post! So my monthly payment drops even more. Which means: hello surf trips!!
 |
 |
| Both pictures - Cabo San Jose, Mexico - March 2012. |
My refi took a few months and finally wrapped up at the end of March. The second bonus of my refi is that I got one month off from mortgage payments! I didn't know what to do with all that extra money so I moved it to my savings account really quick (you know, the Surf Trip Fund) before I was tempted to spend it on things I don't need, like more clothes, shoes, or another surfboard. Although I'm going to use some of it to buy myself a sweet mid century modern arm chair. I just have to wait until I run across the perfect one. I wanted this one, but was two days too late and someone else bought it first - boo.
 |
| My dream mid-century modern arm chair. |
Posts
I'm truly happy for you, Amber. You were able to lighten your financial burdens just by refinancing your house. Although you paid a certain amount for the appraisal, it's a good thing that you applied to a "No Cost" refi loan, since it's more convenient, as the bank will pay for the other fees and costs. Hope you can surf more on the beach now that paying for your house will be a lot easier.
ReplyDeletethat chair was bitchin, but you'll find its equal -- or its ...trumper!! i want to come to your house someday, p.s.
ReplyDeleteFirst of all, congratulations on your new home, Amber! ;) You’re so lucky to have received your investment. Paying off the appraisal didn’t become much of a burden for you because of that. You’re doing very well with everything; you’re finally able to do things you’ve always wanted. Surfing is an awesome sport!
ReplyDeleteGood going, Amber! It’s so amazing how you’ve handled your loans! It is indeed a smart move to go with a No Cost 30 Year Fixed Rate Loan. Now, you get to enjoy a decrease in your monthly payments. I hope you get a chance to go to a lot of surfing trips. Dealing with monthly payments can be very stressful. You deserve a break at least once in a month. =)
ReplyDeleteI am glad you found refinancing your home a very practical decision financially. Payments for our home can eat much of our budget. Also, it is good that you were able to increase the value of your home. For those who also want to do the same, one tip I can give is to keep your home at its best physical condition. Investing in home maintenance would eventually be a factor that would help you increase the value of your house.
ReplyDeleteThis must be a great highlight of your year! Well, if you got a satisfactory appraisal, then that means you know how to take care of your house. I agree some people get dismayed when their houses are valued lower than they expected it to be, but sometimes, it also depends on the current economic state and how well the housing business is doing. Nevertheless, congratulations!
ReplyDeleteBy refinancing your mortgage, you can considerably reinstate your present loan to a new mortgage with better conditions. Anyway, what matters most is that you are happy with the outcome of your decision to refinance your home loan. The benefits could be really flattering! =)
ReplyDeleteYou deserve praise for what you were able to do, Amber! That decision of refinancing the house shows how you give things the consideration they need. Good job, especially with that appraisal! ;) In case you get caught in any confusion about your property again, just do what you did here – contact your mortgage specialist. ;)
ReplyDeleteI must say, you got yourself a great deal! Contacting your mortgage specialist was the best decision you made, and it really paid off. I’d probably consider hiring a mortgage specialist too by the time we’re financially ready to purchase a new home. More savings means more trips to come. Congratulations on your new home!
ReplyDelete-Genny Stutesman
I agree with Genny. Hiring a mortgage broker is the best decision you’ve done. They have clearly provided an excellent mortgage plan that suits your financial status. Mortgage specialists are skilled with handling financial deals, and I’m pretty sure they can guide you all the way and help you with the whole process with ease.
ReplyDeleteJustin Bill
If you’re one of those home owners who have equity in the property but cannot afford to make high interest payments, then you will have to go for the option of home mortgage refinancing. This will help you reduce your high interest rates into lower ones as the market rates are going quite low. It is expected that the lower rates may continue through 2013. So, if you meet all the other criteria of the lender, then this is the best time to refinance your home mortgage and take advantage of the low rates. So, now the onus lies on you as to what decision you will take.
ReplyDeleteThe amount paid per period and the frequency of payments; in some cases, the amount paid per period may change or the borrower may have the option to increase or decrease the amount paid.
ReplyDeleteanonymous
Great posts.
ReplyDeleteJames | Emerald Creek Capital