• Skip to main content
  • Skip to primary sidebar
  • Skip to footer
My Money Design

My Money Design

Designing Financial Freedom

  • Start Here
    • Start a Blog
    • What Is Passive Income?
    • Passive Income Ideas
    • My eBooks
  • Categories
    • Retirement
    • Savings & Budgeting
    • Stocks & Investing
    • Philosophy & Motivation
    • Travel Rewards
    • Money Books
    • Mortgage & Refinance
    • Insurance & Estate Planning
    • Credit
    • Taxes
    • Career
    • Blogging
  • About
    • Contact Us
    • Advertise
    • Privacy Policy

Adventures in Refinancing, Chapter 4

January 30, 2012 by MMD Leave a Comment
Some of the links included in this article are from our advertisers. Please read our Disclosure for more info.



mortgage, home loan, refinance, equity, PMI, principal mortgage insurance, house, Obama, Home Affordable Refinance Program, HARPWe’ve got big news: We applied for a refinance!

What’s New

It’s been quite a while since I’ve updated this series. Since my last post in Chapter 3, a lot has happened – a lot of good things!

• New HARP LTV Guidelines. As of December 2011, the rules of the Home Affordable Refinance Program (HARP) changed. Under the new updates, you could qualify for a HARP refinance all the way up to a loan-to-value (LTV) ratio of 125% of the current market value of your property. Keep in mind, however, that once you get near a LTV ratio of 100% or more, the interest rates the mortgage companies will offer will be not nearly as good as the “current market rates”.

• New HARP PMI Rules. In addition to the LTV changes, HARP also added a condition where if you have PMI (private mortgage insurance), you will need the same amount of insurance coverage for a refinance. Basically whatever you’re paying now will be the same thing you pay on your new refinance. In my case, this is about $90 per month. Although this sounds like a bad thing, it is actually good new. I was always afraid that if I got a refinance, my house would appraise for way less than what I originally bought it for, and I’d end up paying WAY more for PMI. Basically, the $90 I pay now is a worst case scenario.

• Appraisal Hope. My neighbors who have the same exact house as me got their appraisal back. Their house appraised at $160K. Hooray! That means there is hope that if I get an appraisal, my house will appraise for more than what I still owe (about $139K). Judging by the State Equalized Value of $134K and the appraisal of my neighbors’ house of $160K, I’m confident that my house should appraise for somewhere in between these two figures (hopefully on the higher end!).

• Mo Money! (Yes, that was an “In Living Color” reference). The profit-sharing gods at work were good to me this year. This check combined with my upcoming Federal tax refund and some savings we have should give me enough buffer to pay-down any difference I need to make up an LTV of 100% or less in order to guarantee that I get the best possible interest rate. After going through the math in my post “Which Is Better – Paying Down Your Auto Loan or Mortgage?”, I know that putting extra money towards my mortgage would be the smarter thing to do for my situation because it would eliminate several years worth interest and payments.

Taking a Leap of Faith

So enough talk! I decided it was time to take action!

On Friday, January 27, 2012, I had an appointment with a local private mortgage company and we filled out an application. This was the same company that my neighbors used, so hopefully my luck with the appraisal will be as good as what they had.

Here is the loan we were offered and ultimately will be applying for:

• A 20 year fixed rate at 3.75% with 0.375 discount points

Basically under this refinance, I’d save a boat-load of money. Here is a summary:

mortgage, home loan, refinance, equity, PMI, principal mortgage insurance, house, Obama, Home Affordable Refinance Program, HARP

Not bad, right? Saving $100 per month, erasing 1.3 years of payments, and eliminating about $42K in overall interest seems worth the effort. As you can guess, I was pretty happy with these terms.

What Now?

So having signed the application, now comes the part where we wait … Everything is contingent upon what our home appraisal comes back as.

Once something new happens with the application or appraisal, we will continue our story.

Show Your Work

Want to calculate your own savings? Here is a link to the Microsoft Excel spreadsheet I created to make the results table above.

Adventures in Refinancing – Chapter 4.xls

Go to the next chapter …. 

Table of Contents:

Chapter 1, Chapter 2, Chapter 3, Chapter 4, Chapter 5

Photo Credit: Microsoft Clip Art

Filed Under: Mortgage & Refinance Tagged With: equity, HARP, Home Affordable Refinance Program, home loan, house, mortgage, Obama, PMI, principal mortgage insurance, refinance

Reader Interactions

Leave a Reply Cancel reply

Your email address will not be published. Required fields are marked *

This site uses Akismet to reduce spam. Learn how your comment data is processed.

Primary Sidebar

  • Email
  • Facebook
  • Pinterest
  • Twitter

More Great Posts!

Footer

Recent Posts

  • How to Manage Your Debt and Reduce Financial Stress
  • How to Invest During a Recession and Actually Make More Money
  • What’s the Best Way to Retire Early? By Doing This One Important Thing
  • How to Stop Worrying About Money – 5 Effective Strategies for Better Money Habits
  • How to Turn Cloudy Pool Water From Green to Blue

Search

Archives

My Money Design is for entertainment and reference purposes only. The information presented is the opinion of the author only and should not be interpreted as specific advice or recommendations towards your financial situation. Always consult with a true professional before making any financial decisions.

Affiliate Disclaimer: My Money Design may be compensated for our personal opinions, reviews, and affiliate relationships with some of the featured products and services. Google Adsense and Amazon Associates are examples of such relationships. Such content, advertising space or posts may not always be identified as paid or sponsored content. All offers or claims are subject to change without notice and should be verified with the manufacturer, provider or party in question.

Copyright © 2011–2023 MyMoneyDesign.com · All Rights Reserved · Powered by WordPress

This website uses cookies to improve your experience. We'll assume you're ok with this, but you can opt-out if you wish. Cookie settingsACCEPT
Privacy & Cookies Policy

Privacy Overview

This website uses cookies to improve your experience while you navigate through the website. Out of these cookies, the cookies that are categorized as necessary are stored on your browser as they are essential for the working of basic functionalities of the website. We also use third-party cookies that help us analyze and understand how you use this website. These cookies will be stored in your browser only with your consent. You also have the option to opt-out of these cookies. But opting out of some of these cookies may have an effect on your browsing experience.
Necessary
Always Enabled

Necessary cookies are absolutely essential for the website to function properly. This category only includes cookies that ensures basic functionalities and security features of the website. These cookies do not store any personal information.

Non-necessary

Any cookies that may not be particularly necessary for the website to function and is used specifically to collect user personal data via analytics, ads, other embedded contents are termed as non-necessary cookies. It is mandatory to procure user consent prior to running these cookies on your website.