Decision: Mortgage

And now for the dramatic conclusion of my mortgage refinance saga! (Here’s the link to part one!) I’m apologizing in advance since this will be a long post!

After reviewing my options, I initially called Bank Bae and was like, “Yeah, I’m good!” Of course, they wouldn’t take no for an answer. They said they would update my offer so that I wouldn’t take out $180K, but only how much was owed on my previous mortgage. We also discussed paying closing cost out of pocket so that they would not be added to my loan amount. This would bring my monthly payment down to lower than what I was currently paying. I would pay off the new loan at the same time as my current loan, but would save $3K in interest.

Feeling great about my decision, I moved forward with the paperwork. In the beginning of October, I received a phone message from the loaner officer. I left several messages that went unreturned. According my initial paperwork, my closing date was supposed to be 10/7/2016. On the 6th, I emailed saying I haven’t received any paperwork with new numbers or spoke to anyone about my mortgage. No response, but my closing date magically changed to a week later in my online portal. I wasn’t concerned. I have a mortgage currently; they should be stress to keep me interested!

Finally on the 11th, I get a call to schedule closing in two days. I was assured I would get a phone call reviewing updated numbers since all the documents I had still said I was borrowing $18oK. On the date of my closing, I got a call to review my closing documents. When they started reviewing the numbers, I realized they hadn’t changed. I was like, “Yeah, no! I am not taking out extra thousands of dollars for no reason.” The loan officer asked me to email him an updated payoff statement from my current bank. Did he really ask me to do his job for him? Yes, he did! My loan was actually $4K+ less than when they requested a payoff on September 30th! (Why would you do that when you know payment is due on the 1st?!).

After emailing him, I wondered if I was making the right financial decision. Clearly all banks have their issues and they really do their best to screw you over! About 5 hours before our scheduled closing, he calls me back with new numbers. New loan amount: $175,200 which included closing cost and I would get $1183.14 back. They basically ignored my request to pay closing cost upfront (obviously they make more money on interest the more I take out!) I reviewed the numbers:

	Current Loan	New Loan
Balance/Loan Amount	$170,436.08	$175,200.00
Interest Rate	4.25%	2.875%
Years	20	15
Projected interest amount	$76,193.77	$40,690.95
Monthly Payment	$1,171.60	$1,199.39
Interest I will pay with my extra payments	$17,475.69	$11,881.11
Payoff date with extra payments	June 01, 2021	June 01, 2021

I reviewed my criteria for refinancing and met the following: 1) monthly payment could not increase more than $50, 2) must save more than $2K-$3K and 3) the payoff date could not be extended. Summary: For an extra $27.79 a month, I will save $5,594.58 in interest. If I subtract closing costs and add the funds I will get back from the loan, I will save $3,528.70 over the course of the loan. I’ll also be getting $443.24 from my old escrow account.

Other criteria I didn’t really met: 1) flexibility  – however, if I lose my job or have an unexpected change in our expenses, I can just stop making extra payments and still come out saving money (like $36K!). 2) the loan amount is a lot higher than what I wanted. I fought for the lowest loan amount, but still could have done better if I paid my closing cost upfront! This was a loss in my book.

Feeling mostly comfortable that I would win out in the long run, I decided to move forward with the loan! I am now the not-so-proud owner of $175,200 debt. Lesson learned: All banks are evil and we are paying for our next home in cash!