Refinancing? Already? Part II

July 21, 2009 at 7:56 pm Leave a comment

Well, over the last month (err.. and a half), Shawn and I have been keeping busy. Weddings, vacation to the Outer Banks and tons of weekend plans. No excuses for not updating the blog more, but one incredibly important activity that kept us busy was our refinance. Thanks to Twitter friend Merrill Clark (@webcontentNH), we were put in touch with the Wayne Laverdiere over at Newmarket Lending, who walked us through the refinancing process. I had done some research and had an important conversation that made me decide it was worth looking into.

If you’re considering refinancing, let me warn you that the paperwork required to back up your financial past is more involved than when purchasing a house. In order to complete refinancing, we had to gather:

  1. Copy of recent mortgage statement
  2. 07 AND 08 W2’s (from both of us)
  3. Recent paystubs
  4. Copy of most recent retirement statements
  5. Copy of all bank statements for all accounts – checking accounts, saving accounts, ING accounts, etc.
  6. Contact information for the condo association (which is an issue in and of itself)
  7. A document proving what the monthly condo fees are
  8. A copy of both of our drivers licenses and a copy of our social security cards and/or passport

When you’re seeking a mortgage, you probably have to hand over half of that (though they do verify a lot of the numbers on their own, without gathering paperwork from you) and they pull your credit report, which Wayne did not have to do.

There were two significant hinderances that we came across that caused the entire process to take almost 3 full months: The first is that everyone and their mother is refinancing right now. Refinancing helps to lock in a better rate for the life of your loan (in our case, 30 years), and helps to make your monthly payments lower. Rates are at record lows right now, and people that had previously locked in high rates saw opportunity to better their financial situation during an otherwise crappy economy. Because of this, lenders and paperwork were backed up, causing the communication between all parties invovled to be much slower than usual.

The second hinderance was my new job. When you are refinancing, the smartest thing to do is to keep your finances and income stable. That means, when you’re in the process of refinancing or buying a home, you need to keep your purchases in check too, including no major purchases like cars, home improvement, or major appliances. By getting a new job, I disrupted the process, even though I went from full time and salaried to full time and salaried. Basically, I wound up causing us another 2 weeks of waiting until I got my first full paycheck to prove my income. I don’t regret taking the new job, but if you can avoid shaking up the process that way, I’d recommend it.

We only had to pay a small amount in closing, as our other closing costs were folded into our mortgage payment. That said, we will break even in just over 3 years, which works out for us because that’s about the timeframe we had in mind for living in our condo. My best advice is to stay in close contact with your lender – be sure of numbers, dates, timeframes, etc. so that you know exactly what to expect when you get to the closing table. Some of the numbers we were given were “estimates” that wound up being significantly more when it came time to talk finitely.

Have you refinanced before? Any suggestions to add for those folks who are going through it for the first time?

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Entry filed under: Finances.

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