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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.