Saturday, October 10, 2015

Refinancing: Episode 2

As promised, here is the second half of our refinancing experiences:

We finished up or refinance the other day so I thought I would let you know about the rest of the process and the associated costs. Recall that we were refinancing from a 30 year mortgage at 4.625% to a 15 year mortgage at 2.875%.

Two weeks after meeting with the mortgage officer he emailed us and told us that the application had been accepted and that we could set up a time to come in and finish the process. Since my work schedule wouldn't allow me to make it to his office for another week we set up to meet with him the following Friday.

On Tuesday he emailed us our HUD-1 statement and let us know that we would need to bring a cashier's check made out to the title company for $2,060.04.

On Friday we met with a lady from the title company and signed a ton of papers, handed over the cashier's check, and now we're just waiting for our new mortgage company to send us our first mortgage bill. Scheduled to begin payments in about 6 weeks.

Cost breakdown:

We had to pay $327.11 to our old mortgage company for interest that was accrued. We had to pay $278.91 to our new mortgage company for the interest that would be accrued before our first payment would be billed. We had to pay $1,146.02 to fund our new escrow account but we will be getting our old escrow balance of $861.87 back two weeks later. The refi fees were only $224. And there were title processing fees of $84. The only other expense was the $8 fee that our bank charged us for the cashier's check.

As I see it, the interest would have been paid no matter what and the escrow money is technically ours, it's just sitting in an account that they manage for us. So, in my mind, the total cost that we had to pay to refi was $316.  

When you look at the costs that way, it means that it will only take us less than two months before we have made up the costs that were incurred in the transaction.  

Next steps:

As far as they have told us, the only thing that we have to do still is to wait for nearly two months before the payment schedule begins.  

Just like when you first purchase a home, when you do a refi, it takes a while for them to get everything set up and ready for you to pay. So even though we did the refi at the beginning of March, we aren't allowed to begin making payments until May 1st. This will give the bank account that we use exclusively for our mortgage enough time to rebuild after having to pay for all of the refi fees. So since this account is feed $600 every two weeks our first payment to our new mortgage will be just over double the required amount.

I'm now so excited about the new payoff potential that this refi gives us, so it looks like all the extra energy (and funding) will be going into it, at least for a while anyways, until we burnout from being mortgage poor.