Tuesday, December 1, 2009

Refinancing the Mortgage....maybe

Remember when my fiance bought our condo? What a scary yet exciting time that was. I didn't think we would have to even think about another closing for several years to come.

With rates at such low levels, however, we are trying to refinance already.

From my post when we first bought the place:

Estimated Monthly Payments
Mortgage = $937.68
Taxes = $175.00
PMI = $61.38

The reality:

Currently Monthly Payments
Mortgage Principal = $146
Extra Payment to Principal* = $102
Mortgage Interest = $828
Escrow** = $256

*My fiance has been sending an additional payment of $102 a month so we can get rid of PMI sooner. Smart guy!

**Escrow includes PMI and taxes.

So...it seems we are paying $53 more a month than what we had originally estimated (before our extra payment to the principal). I'm not sure why that is but I suspect our taxes went up. I tried to look up our taxes online but the city's website isn't showing anything under fiance's name or our street address. I'm sure my fiance knows more but he's a busy guy today.

I do know this....our current mortgage rate of 6.75% bugs the hell out of us. With rates being offered under 5% to new buyers and buyers who are at risk of default, it seems like we are missing out. At one point, my fiance thinks that since we have so little equity in the condo and since we have an FHA mortgage already backed by Fannie Mae, that maybe we did qualify for the Making Home Affordable Program.

But like all other real estate questions I've seen, this one is complicated even for my legal trained mind. First, we called our bank and they said not only could we refinance at a lower rate, that there would be no closing costs or an appraisal!

Then, they called back and said there would be closing costs. The next call was to say they no longer offered refinancing on condos (ugh!).

Frustrated but not defeated we shopped around until we found a loan company that would refinance our loan at a better rate....with closing costs and fees of course. And we needed an appraisal.

So the appraisal was today! We cleaned, painted the kitchen (finally!), organized and staged. I hope it went well. It's a little frustrating because someone in our building is trying to sell off his multiple units and has priced them below market. And according to my research, a condo appraisal must use comps from the same building.

The loan company told us the appraised value must be about $1500 more than the purchase price of $152,659 in order to tack on the closing costs to the loan. Otherwise we would have to pay them out of pocket or they might not even give us the refinance.

We will hear back in a few days and then we can figure out what to do next, including plugging in the costs/benefits into this nifty "should I refinance?" calculator I found.


The Fiance said...

The appraisal went well albeit after having to listen to many drawn out stories of the appraiser's family drama (he definitely shared a bit too much information). The appraiser definitely appreciated the prewar construction and great condition of our particular unit. He noted the number of improvements that have been made to the unit over the years, including our remodeled kitchen (the previous owner installed granite counter tops and we put in the tile back-splash). So, he was aware that our unit is in much better condition than the others being unloaded back on the market, which should help our valuation against the comps significantly.

Hopefully, the appraiser will value our unit at the $155,300 needed in order to secure our loan. This is about 1.2% greater than the original valuation we received last year which is not entirely unreasonable given the improvements we have made over the last year and that prices our local market has returned to pre-recession numbers.

And yes, taxes have increased about 15% this year. The extra $56/mo is to cover the difference.

Sallie's Niece said...

Thanks for the update honey! You definitely should comment more, you're so smart. :-)

paisley penguin said...

Catching up on my blog reading...

We just refinanced our condo in October. Our appraisal was slightly disappointing but we were able to go through our credit union and get 4%. We did have to take out a small second mortgage to cover closing and the balance of our original mortgage but all in all we are saving money, paying a lower interest rate and are out from under PMI!!!!!

Next month I plan to start paying half the mortgage every two weeks so we end up paying an additional payment a year.