You might not find the truth here, but you can stumble all around it.
Wednesday, October 31, 2012
A great deal . . . if you can get it.
Teri and I are in what may or may not be the final steps in the process of refinancing the palatial Bayberry Estate. I'm not sure because every day seems to bring a new e-mail or phone call from our loan officer Scott over at GigantaMegaBank, telling us they need "just one more thing."
This will be the third time we've taken a loan on our home in the six years we've owned it. When we bought the house, our interest rate was north of seven percent. When interest rates began falling shortly after we moved in, I refinanced and got what I thought was a pretty good deal at 5.25 percent.
Now mortage interest rates are the lowest they've been in memory, and we've locked in a rate of 3.125 percent interest on the house. When you consider that our loan will be subsidized significantly by the mortage interest deduction, it's getting awfully close to free money.
But, free money or not, they are sure making us work for it.
When we took out the loan six years ago, the process was a breeze. I invested maybe fifteen minutes of work into getting the loan and then another hour or so signing the mound of documents that comes with a mortgage closing.
I called an 800 number somewhere and the guy at the other end entered my social security number into his computer and approved us immediately.
"Don't you even want my wife's social security number?" I remember asking.
"No, I've got everything I need," he replied. And that was it.
What a difference a housing collapse and a great recession make! Even though our credit ratings are still fine and the mortgage is for a smaller amount than the last time we refinanced, the bank is putting us through a very strict underwriting process. I've given them dozens of documents: bank statements, insurance records, 401k statements, W-2s, and the list goes on and on.
And every day Scott from GigantaMegaBank calls asking for "one last thing." So far, I've played along, but I'm drawing the line when he snaps on a latex glove and asks me to bend over.
Other than our relatively small mortgage, which is only about a third of the assessed value of our home, we don't owe a penny to anyone. We have more than enough stashed away to cover the mortgage we're taking out. We've never been a day late on a payment to anyone--I'm so obsessive about this that I've actually prepaid our mortagage several months ahead.
If anyone is a good credit risk, it's us, and loaning money to us should be an absolute no-brainer. We're supposed to close on the refi any day now. We'll see.
I've actually been shocked at how much work and how intrusive this process has been compared to the last two times we went through this. Unless you have superb credit, are persistent and are willing to put a lot of effort into it, I'm not sure how anyone is able to take out a mortgage in today's banking environment.