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Refinance

Friday, July 3rd, 2009

We recently refinanced our mortgage. I hate moving and am planning on dying in this house so it was a good time to take advantage of the low interest rates. I was really surprised this whole process was actually rather stressful and annoying. I would think everyone involved (banks, lawyers, appraisers, etc) would have this process down so it would go smoothly, rather than furiously doing some things, then waiting for weeks and more furious stuff and more waiting.

Our original loan was through Chase so they were the first lender I went to. When you get a new loan with the same company you can avoid certain fees, specifically NYS mortgage tax and possibly other things like title insurance. Unfortunately Chase didn't work out. Their rates were pretty high and even though I was saving on the mortgage tax, they seemed to make that up in other fees (surprise, surprise).

We tried giving a local bank a shot: Fairport Savings Bank. They failed miserably. I scheduled a meeting with their mortgage guy and sent him PDF copies of statements and other stuff so he could prepare some real numbers for us. When we get there we find he had a death in the family and wasn't there, so we met with the branch VP. I don't think that guy even knows what a mortgage is. The numbers he gave us were way off and he even told us we would have to pay an entire year's worth of interest at closing. 1 year! I think he meant to say 1 month and asked him again, but he was sure it was a year. Then I contacted the original guy a few weeks later asking for more accurate numbers and he never got back to me. I finally got him on the phone and he said he would email me some good faith estimates that day. I never heard from him again. One reason we were trying with them was their website said they'll waive the NYS mortgage tax. I thought it was a local bank trying to get more local customers. Later I found out that only applied to current FSB customers; that wasn't explained anywhere on the site.

I also called HSBC since they have most of our money. The guy was honest on the phone and told me there was a 5/8 overlay for refinances. This means any interest rate they advertise (on their website, on TV, in print) is really 5/8 of a percent more just because it's a refinance. He said they did this just because they had too many refinance requests they needed to scare some business away. Lame!

Then we went to Canandaigua National Bank (CNB) who ended up having the lowest rate and similar closing costs to others. We ended up going with them.

So there was this mad dash to get a rate lock since the rates were going up. It was only good for 60 days, and since so many people were trying to refinance, appraisals were taking around 50 days to get done. That made me kind of nervous, but it all worked out. So we rushed around at the beginning then waited 2 months then had to rush around at the end (or so I thought). If you close at the beginning of the month you have to pay more interest at closing than if you close at the end of the month. I sweet-talked our lawyer into scheduling the closing for June 30th when he really didn't have time until July 3rd. When we got there on the 30th I found out for some reason they treat the transaction as if it happened 6 days later, so even though it was June 30, in lawyer and bank land it was July 5. It's ok, even with the extra interest we were trying to avoid, the closing costs were way cheaper than I expected and we don't have to make a payment until September!

According to some online calculators, just with the new lower interest rate we're going to save a little more than $40,000 over the life of the loan. Well worth the stress.

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