January 22, 2004

Refinancing Headache

I am sure that those of you on the notify list have been holding your breaths in anticipation of an update on my adventures in refinancing! (To those who aren't, I begged via the list for help in this matter, and of course, the listees came through like champs with the advice.)

I am still waiting from the official numbers from my current bank and lender, but the consensus was that the preliminary $3,200 in closing costs they quoted to me was preposterous.

So I went to another big bank in town at lunch today, and they wanted me to pay them $3,719.55 of my hard-earned money for the privilege of paying about $80 less per month. No thanks! If I'm going to be fucked up the ass, I'd like to be paid for it and not the other way around.

So my co-worker told me about her friend at a bank in N.O. who has done refinancing for several of her friends, and I emailed him in desperation. He waives a lot of the fees quoted by the other banks, and his closing costs came in at around $1,950, which, while certainly not as good as, say, "free," is infinitely more palatable to me.

The choices I have are to go with the 15-, 20-, or 30-year loan.

15-year loan

2% drop from my current interest rate. I can afford this monthly payment. It's not really very much higher than what I pay now, but who wants to be that broke every month? I would like to save some money, for Lord's sake, and I like knowing I can buy a plane ticket to visit friends or re-do some floors or pay the zillions of dollars it gets to have a tree cut down and not have to resort to credit card debt.

20-year loan

1.5% drop from my current interest rate. This comes out to right about what I'm paying now in monthly payments. And cutting 10 years off the loan is peachy keen, but I won't see any real monthly savings.

30-year loan

1.375% drop from my current interest rate. I'd be saving about $150 per month. Which would be dandy, but it's not the dramatic windfall I was naively hoping for.

So now. Now I have to think about what I want to do.

I am strongly considering the 20-year loan, because obviously I can afford that amount every month if I've been paying it forever, and if I think long term, I guess it's a smart move. But if I can afford the 20-year loan, I can really also afford the 15-year loan, so why don't I just go for the big kahuna, pay a little more every month, and be done with it?

No, I don't think I want to be paying more every month. That would make me very cranky.


And then I think, I'm getting an extra paycheck this month and a tax refund which would cover the closing costs, and if I paid them up front, then my monthly note would be even lower, and wouldn't that be delicious?

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