Last week I wrote a post about trying to refinance our house. We’re well underway at this point and hope to close in the next 45 days or so, as long as everything goes as planned.
All four lenders that I initially called responded quickly to the voicemails I left them. Three were brokers that have several banks available to them and one was a local credit union.
They all said that they’re getting lots of refinance calls these days. I indicated that we would be interested in refinancing from a 30-year fixed rate mortgage to a 15-year fixed rate mortgage, we had enough equity in our house to refi and our credit scores were strong. The main unknown for us would be income requirements because we are both self employed and lending requirements have changed regarding the required documentation for self employed individuals.
All of the lenders I spoke with indicated that we should have no problem moving forward with a refinance, even with our self employment status. Our income history was strong enough, we would just need to submit more documentation (full tax returns, income statement and balance sheets) than a traditionally employed person. You know, people that work for The Man.
Some would be able to have the process done in as quickly as 4 weeks, while others indicated they were closing 60 days out now because of such a backlog with the paperwork processing of all the files they were closing. We weren’t too concerned about closing in 30 versus 60 days, just as long as we could lock our interest rate.
Surprisingly, all of the lenders had almost identical estimates for closing costs. None would be charging us points. Some could lock us right away, while others had to wait until the appraisal was done. We ended up going with a lender that gave us a 60-day rate lock and the lowest rate.
Three of the lenders quoted us a rate of 3.875%. The rate we ended up locking at? 3.75%. Whoo hoo! Better than our little financial models we concocted were using. So our overall savings on interest would be an additional $2,500 lower than what we budgeted. A grand total of $112,500 that we won’t have to pay some stinky bank. Double whoo hoo!
What’s happening at this point is reams and reams of paperwork. Lot of documents for us to read through and sign. Also lots of financial documents from us to scan and upload to the lender’s system. Next week is our appraisal. There’s actually plenty of data in our neighborhood for the appraiser to use. I have a value in my head for our house which I think is pretty conservative. We’ll see if they meet or exceed it. However, they’re apparently coming from New Haven, which makes me think that they don’t know Hartford all that well, so we’ll see what they come up with. We’ll let you know how that goes next week and I’ll talk more about the appraisal process then.
Great timing on locking your rate. Bond rates are up today after better than expected payroll numbers (but still bad).
Just catching up on your blog, and was interested to read the refinance posts. We are in the midst of a refinance now (yes, we just closed in May, but the rates have dropped enough and we are not paying anything to refi, so are plodding ahead); however, the rules that changed in February have also changed again in the last three months, and it is onerous, even for well-qualified lenders. I actually think the whole process is ridiculous. For example, since May we had some large deposits in our bank account (due to work expense reimbursements) and the lender refused to rely on the statements in the event we were moving money around (hello, the money is going INTO our bank account, which I would think is a good thing if you are a about to lend someone money). So we had to hold all deposits for a month so we could present ‘clean’ statements. The fact that we had more equity than the bank didn’t seem to matter either. I think the feds got it really wrong when they set these rules into effect. Based on our experience so far, it has been more of a hassle than we expected, but we will save money in the long run, so that’s always a good thing. Hope the process goes smoother for you!
D- We’re happy with the rate we locked. Hopefully everything will go as planned.
Anne- We’re a little concerned with the moving money thing too. We just bought a car, so a lot of money moved out. But then we sold a car, so a lot of money moved in. And then there are commission checks that get deposited, but those aren’t like a regular pay check, they’re dependent on when we have closings. I’m figuring we’ll have to go the “freeze accounts” route too. Not very happy about that. We’ll let you know how things go. Hope your process ends smoothly!