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Archive for April, 2009

Refi Done Deal

April 29th, 2009 at 03:22 pm

We closed on our refi yesterday afternoon and it feels good. To review, we are locked in at 5.0% for 30 years, on a loan amount of $158K. We consolidated a $138K first mortgage with a $19K second, so our loan value went up about $1000 (due to rolling in some of the closing costs). Since we don't have to but will be making a May loan payment (the entire amount going to principal), we will end up immediately paying the new loan back down about to the old amount. All told our closing costs were around $2000, which was a big drop from the $3500 estimated when we applied for the loan. These costs are not rock bottom because we were not able to shop around much for a lender. We have a HELOC that we want to keep open and this meant that our HELOC lender would have to agree to a subordination, which can be difficult and time-consuming. For this reason we ended using our HELOC lender (our credit union) as the mortgage lender for this refi.

Through this process I learned a lot:

-Choose your own title company, and call around. I called 4 title companies to check their fees. I ended up using the same one we used when we bought our house because they were the cheapest, and I knew they were reputable. You don't want to let something fall through the cracks by going with a fly-by-night operation just to save $50.
-Get a quote from the title company upfront. I used the quote later to bargain. Some of the fees on the final GFE were slightly higher than the original quote and they reduced them for me (although they claimed the higher rates were justified by some complexities in our situation, they honored the original quote anyway).
-Ask about every fee. In our case our title insurance qualified for a reissue rate (the original title insurance policy was less than 10 years old). This alone saved us $150 in fees.
-Get your GFE as early as possible. Three days ago I got an early GFE and the title insurance reissue credit wasn't on it, so I was able to get it fixed without much hassle. If this happened on the day of the settlement it would be much more stressful.
-Follow up with everyone. In our case the new lender was swamped, and our original loan officer ended up leaving the company. Because of that there was a bit of a delay in getting our settlement scheduled, but I followed up with the title company and forced a date to be set. I have heard horror stories of rate locks being lost due to delays.

With previous refi's we've done I let the lender pick the title company and handle everything. I definitely felt like I understood the process a lot more because I was more involved in it. I also feel I saved some money in closing costs. Although it was not a no-cost refi, we will end up saving money over the next 3 years, plus our minimum payment is about 40% lower, which will give us a much bigger cushion if an emergency should strike.

A few upcoming changes to our finances

April 17th, 2009 at 04:45 pm

Just a few quick updates on our finances:

-Went ahead and requested a $15K Balance Transfer from Chase to pay off our HELOC. Of course we will still owe but the interest rate is 0% until December 09. It will be our #1 priority to pay this off with every spare dollar.

-Our refi is proceeding along smoothly. Our closing is scheduled for April 28th. The rate we are getting is 5.0% with no points on a 30-year fixed. We are consolidating a first at 5.375% and a 2nd at 5.99%, and our new payment will be the same as our old first, so I think it is a good defensive move.

-We applied for new term life policies through USAA. Our current policies are with Lincoln National and are about 3 years old (they were 25-year policies when we got them). Lincoln has been in the news lately for applying for TARP money and their ratings are scaring me. Since my wife is pregnant now, I'd rather apply for a new policy now should (god forbid) anything happen during the birth. USAA is a rock-solid A++ rated insurer, and we do all of our banking with them, so it also makes sense to keep life insurance policies with them. Their rates are quite good and we decided to extend out to 30-year policies with the 2nd child coming. This way if we decide to go for a 3rd we will be covered. If not, their rates were the same whether it's 25 or 30 year so longer is better. We haven't gotten final approval yet but we went through the medical screens so it should be in the next week or so.

With that, I am off to get ready for a short camping/hiking trip, two of my favorite cheap things to do!

Balance transfer update

April 8th, 2009 at 03:28 pm

To follow up on the previous post, I applied for and received a Penfed Visa platinum card, with a credit limit of $25K. I was then able to complete a balance transfer of $15K to the card. The BT fee was capped at $100, and the APR is 2.99% fixed for the life of the loan. I will be using the $15K to pay down my HELOC. Along with approximately $15K in extra savings I can eliminate the HELOC entirely. The HELOC interest rate was at a floating interest rate of prime minus 0.5%, but was currently floored at 3.5%. Since interest rates pretty much have to go up from here I feel safe trading the 3.5% tax deductible interest for 2.99% credit card interest. The $100 transfer fee is very reasonable in today's CC market. I highly encourage others to look at this card.

Balance transfer offer

April 3rd, 2009 at 04:03 pm

I got an interesting offer from Penfed credit union this morning: a balance transfer offer with a 2.99% APR fixed for the life of the balance, with a transfer fee of 2.5% capped at $100.

I'm not currently a member of Penfed but I get their newsletters. I am actually considering becoming a member and applying for a credit card just to get this offer. I am hoping to get a credit limit of close to $20K. If so, I will be able to pay off our HELOC. I always like to take secured debt and convert it to unsecured. Plus it takes a floating rate (HELOC is prime minus 0.5%, with a 3.5% floor) and converts it to a fixed rate (2.99%). Even though the HELOC interest is tax-deductible, rates have nowhere to go but up so I see this as a win-win. I'll keep you posted on how the Penfed offer plays out.

Chase increased my credit limit!

April 1st, 2009 at 03:25 pm

In the midst of all the news about Chase cutting credit limits on some of their credit card accounts, I wanted to mention that this month, for no reason at all, Chase increased the credit limit on my Freedom card from $6500 to $9500 (almost a 50% increase). My credit score is excellent, and I use this card for everything (racking up about $2-3K in charges a month, and paying off in full every month). That probably explains the move. From what I have heard, the latest trends seem to be creating a bigger divide between those who have good credit and those who don't. So if you have a low FICO, Chase cuts your limit, if you have a high FICO, they raise it. The only thing I don't get is, since I PIF every month and earn $250 in rewards every 6 months, why would they even want me as a customer? They are losing money on me as it is!