Tuesday, September 11, 2012

The Re-Fi: 15 vs 30

I'm a little late on this, but it's still somewhat new. Jennifer and I finally refinanced our home on Aug. 23rd after shopping around late June. The Spencer's helped us find a loan officer to go through as they were shopping around at the same time. We found the best price/rate at American Loans. Ours was a little more costly and troublesome since we're dealing with a duplex, but still worth the hassle.

I ended up working with Jason Erskine - the quote he gave me at the start was extremely close to where we ended. It was just under $1100 in closing costs and our appraisal cost was $850 (usually half that for a normal house). The appraisal came in at $235K for an owner occupy and $240K as an investment property. We needed it to come in at $215K to ensure we had 20% equity (hated those PMI payments) - so success there! I bought in March of '09 at 209K, but it appraised then for $230K.

Then we learned why it's wise to avoid changing jobs while in this process for employment verification purposes. I was dealing with one HR department that needed my last paycheck to clear first while the new HR department didn't completely have me in their systems yet. Then to learn I was switching back again made it all the more important that we hurry the papers through.

In the end we locked into a 3% rate on a 15 year fixed loan. Our total payment actually ended up being about $50 less each month - this while paying $336 less towards interest (and instead towards principal)! And of course that number just gets less/better each month.

With the new job and the refinance kicking in, we are on track to paying off our home a year earlier than expected - can't come soon enough!

Side note: it was also worth it to check on home insurance as well. After talking to a friend we were able to lower my home insurance payments by $22/month and my life insurance by $15 a month (I knew I was paying too much for that) - all for the exact same coverage. If anyone wants to check with him he's at preston@kelcoinsurance.com.