Posted on Thursday 24 June 2010
I’ve pretty much given up on trying to reduce our expenses. We’re fortunate to be able to save a lot of money in addition to meeting our obligations so I’ve decided not to worrry about it. However, I am concerned about debt reduction, specifically our mortgage. I want Mr. Savvy and I to be able to retire in a little less than 17 years. However, I refuse to retire with a mortgage. Housing is most people’s largest expense. Once that expense is removed, the amount you need to live vastly decreases.
We bought our current home in 2006 so we’re only four years into a 30 year mortgage. While we’ve been putting a little extra to the mortgage every month, lowering the interest rate will make a big difference. So we decided to refinance. However, like most people, the housing values in our area have dropped. There are two foreclosures in our neighborhood, one right next door to us. I’m sure that our house isn’t worth what we paid for it. We don’t plan to move so that isn’t a major concern. The issue is how much less. Based on my estimates, we’ll be subject to PMI if we refinance but I’ve crunched the numbers and it’s still worth it financially. That said, the next few posts will be a timeline of our refinance process.
While we’re members of a local credit union, I’ve heard great things about PenFed. Their rates/terms beat our credit and the closing costs are lower so we decided to apply with them. Tuesday evening after work, I went online and completed a membership application. There was a slight glitch with the website but I was able to call and immediately get it resolved (even though it was probably well after 7pm). Next I completed the mortgage application. It asked the usual questions – loan amount, income, assets – and didn’t take long to complete.
Yesterday I received what appeared to be a form email from PenFed stating that they’d received our application but due to the large volume, refis are currently taking 45-60 days. It went on to say that a loan officer would call us but not to call them until that time. Based on that, I didn’t expect to hear from anyone anytime soon but that’s not a problem for us.
Imagine my surprise when I received a call from a loan officer this afternoon. She said that she’d reviewed our application and everything looked good. I expected that would be the case because our only debt other than the mortgage is my student loan, which is currently in deferment since I’m in school. We have a good income, good credit and a low debt to income ratio. She said she’d be e-mailing some forms that we need to sign and return. She also confirmed that we’d locked in the rate, would be using them for escrow and were paying closing costs from our savings (vs rolling into the loan).
Hopefully the rest of the process will be as quick and easy. Has anyone else refinanced their mortgage lately?