Saturday, December 17, 2011
Last month, after some changes to the Federal HARP program, Deb and I gambled with $500 to try and refinance the house and save a few bucks a month. The two main changes to the HARP program which made it worth the risk were the opportunity to shop any lender versus being required to refinance with your current lender (your current lender is really motivated to drop you mortgage rate by 2%), and streamlined refinancing that avoids any PMI and includes limited refi costs. The trick is though, that you cannot borrow more than 105% of what your house is worth currently, and starting in march, 125%. So Deb and I gambled, got quotes, and started the refi process. If it didn't work out, we would be out a non refundable $500, which is credited as part of your refi if it is approved. The key was the appraisal, which was conducted last week. If the value of the house was below $138,000, we would need to come up with whatever cash was necessary to get to that in order to complete the refinance, or just lose the $500. Well, shock of shocks, the house appraised for $188,000, so we got an even further reduced interest rate, and were able to do a conventional refi with no points and little expense. We actually hold, on paper, 24% equity in this place. The refi cost ended up totaling $3705, and we will save %181 a month off of our current monthly payment. That means it will only take 20 months to recoup the refi costs. Of course if we are able to save that money, it ends up being cost neutral. Plus, we will have no house payment due in January, and get our escrow money in hold back from our original lender, so that extra cash boost will give us a few bucks to pay for our February Vegas/Mesquite vacation with billybob and kwonnie. Sometimes gambles just work out. Hope that happens in vegas also!