mad anthony

Rants, politics, and thoughts on politics, technology, life,
and stuff from a generally politically conservative Baltimoron.

Saturday, June 19, 2010

New adventures in re-fi...

So yesterday, I refinanced my house. I've had some savings socked away that were burning a hole in my pocket, or at least in my savings account. I was seriously considering buying a second car - something sporty and topless - but the practical side of me just couldn't bring myself do something as unnecessary and fiscally irresponsible as buying a giant money pit. So I decided to look into doing a refi instead.

I was originally hoping that as part of it, I would be able to drop PMI. I bought my house 4 years ago, put 10% down, and took out a 40 year mortgage at around 6.3%. But I had to have an appraisal, and it came back lower than I hoped- evidently, my house is worth 5% less than I paid for it. Which actually, given how the housing market has been, isn't that bad, considering I bought at the peak of the market in 2006. It also means I'm not upside down, which is nice to know. But it also meant that I would have to kick in pretty much every dollar I had to my name if I wanted to drop PMI. My thought was to put an amount between the original amount I planned and what I would need to have a PMI-free 80% Loan To Value. But the mortgage company seemed to have misunderstood, and when I got the HUD-1 20 hours before I was due to close, it had the original numbers. I could have delayed closing, but decided to just go ahead. If I want to, I can always make a large one-time principle payment to bring it down, and it will drop off on it's own in 5 years, which will save me $68 a month.

So right now, the new loan will reduce my monthly payments by $140 a month, even with PMI, and will reduce the term by 6 years. That means in about 2 years I'll have gotten back what it cost in origination fees and closing costs, so I think it was a good deal.

I think I'm actually better off with the lower amount down as well. While it would be nice to drop PMI, I like actually having some cash on hand. Since I didn't buy a second car, I'm thinking of replacing my first one in the next year or two, and it makes more sense to pay cash for it rather than use my cash to reduce my low, tax deductible mortgage and then take out a high interest car loan - especially since I'm considering used cars, which have higher interest rates.

The car would be an indulgence - I don't really need a new one. But I'm trying to find a balance between saving money and being frugal, and buying things that I enjoy - and I've always been a car nut. We'll see, though, if I can really bring myself to buy a new vehicle, especially one that's a little pricey - what I want is a preowned luxury SUV, probably a Land Rover L3, Range Rover Sport, or Porsche Cayenne. Any of which would probably end up being money pits to maintain.

Anyway, there was one minor hiccup in the whole signing process. The lender sent a rep they contracted out with the papers for me to sign. Aside from a HUD-1 that was missing most of the numbers, everything seemed pretty normal - until I got to a form saying that I was in a flood zone, and that by signing it I was agreeing that the lender wouldn't make the loan unless I got flood insurance. Which was odd, since I wasn't in a flood zone 4 years ago when I bought the house, and since I had earlier signed a paper saying I wasn't in a flood zone and didn't need insurance. Rep calls title company, who says it's a lender issue. madanthony calls lender, leaves vm, luckily gets a callback a few minutes later. Rep says it's not in a flood zone, I don't need flood insurance, and I can either write that I'm not in a flood zone and sign it or not sign it at all. I elect to go with the latter.

Evidently there is a 3 day grace period where I can back out, so they wait until then to actually transfer the money and finish processing everything. So hopefully this won't blow up, and hopefully I've made the right moves financially.


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