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WE REFINANCED OUR MORTGAGE!!!

by J. Money on Monday, May 16, 2011

smiley house with dog inside
Maaaaaaaaaaaaaaaaan I’ve been waiting a long time to say that :) Seriously, we try every 5-6 months and always heard back “No,” “No,” and “Hellllll No!” Haha… and damn understandable too. We’re $60k+ underwater!!!  I wouldn’t let myself refi either.

But you know who did?  Chase!! The same bank that already HAS our 1st mortgage, which is the craziest part of the whole thing in my opinion.  And what’s even sillier is that THEY called US to see if we had considered it before? I honestly thought someone was trying to scam us.  I kept asking them questions to see if they were legit (they were), but it was pretty damn weird.  When does a financial institution call you to SAVE YOU MONEY??  Doesn’t make sense, does it?

I didn’t think so either, but the rep said they were pretty much trying to keep my business. They knew I’d be looking to refi if I hadn’t already (which is funny cuz I had *just* given up for the year), and they had some good offers on the table to make us stay with them, rather than move elsewhere.  Which, of course, I then tried to do cuz I was like “If Chase is saying I can refi and THEY don’t care about my underwater-ness, or the fact our income isn’t *as* stable anymore, then maybe others won’t either? Yeah!  Let’s call them up and tell them the deal we got, and have them bid for our business!  I am sooooo smart!!!” Haha…

Yeah. Didn’t go down that way.  Everyone pretty much laughed in my face, just like they had done the previous FIVE TIMES I’ve called them over the last 4 years, and basically told me I’d be an idiot not to take them up on their offer.  And that they probably have much more leeway cuz they’re already holding the loan I wanna refi (our 1st mortgage, not our 2nd. Which is with USAA, and whom I also called thinkin’ could be of help – which actually came kinda close, but also kinda not once they realized the details of our situation ;)  I swear though, one of these days!!!)

So.  That’s the quick story of how I got from nowhere, to somewhere, in the last 30 days. And to be honest, up until Friday when I physically signed the paperwork (and live tweeted it!), I still didn’t believe it was all true.  In fact, I’m still afraid something will pop up and slap me in the face!!!  But after talking with each party to the transaction, multiple times, AND reading most of the paperwork (who reads every single word, right??  that would be nutt balls) everything seems to have checked out a-ok.  And even cooler was seeing my LLC name on all the loan docs which ties to this blog :)

4 years ago we were sitting in this exact same spot, about to make the life-changing decision of being home owners for the first time, and I had no clue what I was getting myself into.  All I could think of was not having to pay rent anymore, and coming home to a house we didn’t pay a single dollar for yet.  Not even at closing – everything was comped and we didn’t even have or need a down payment.  It’s pretty insane looking back, esp that it brought us to where we are today.  4 years later, as a full-time blogger about money!!  What a difference :)  And why I can never take back that single, spur of the moment, decision I sometimes curse when I make those mortgage payments.  It sure stings like crazy, but it made me who I am today.  And I owe my happiness to it!!!

Whew, that was a lot to get out.  Only took me 15 mins to type though! Haha… that’s what passion and excitement does to ya ;)

Okay, so what does this new refinance look like?

Well, here’s our old 1st mortgage:

  • Chase Bank
  • 6.875% (fixed)
  • 30 year INTEREST-ONLY mortgage
  • Monthly payments of roughly $1,917.96
  • Zero toward principal, other than the extra I threw against it every now and then

Our NEW 1st mortgage:

  • Chase Bank
  • 5.5%!!!! (fixed)
  • 30 year CONVENTIONAL loan!
  • Monthly payments of almost exactly the same amount: $1941.42
  • Roughly $320 paid toward principal every month!!!
  • 1 and 1/2 months until our 1st payment is due, giving us $2k to do something with.
  • Closing costs of roughly $5,000 – which will be “paid off” in a little over a year. (Unless we apply that $2k “saved” towards it. Then, 9 months.)

How’s that for a clean getaway? We drop almost 1 1/2 interest points, get our loan upgraded from “interest only” to “conventional” – AND keep almost identical mortgage payments?!!!  MAN that is exciting.  Even though we had to pay $5k to close the deal! Haha… but it all goes back to that same long-term game plan of creating wealth.  You do it over months and months and years of time, not right at this moment.  You put plans into effect that will come back to help you in the future.  Sturdy, trusty deals which you can rely on 100% over choosing what’s “best” for you TODAY.

That guy 4 years ago who signed that original loan?  He was living in the here and now. There was no such thing as a budget or planning for the long term – there was just today.  Just that “perfect house” he wanted to hurry up and move into with his then-fiance and start a new life together.  The American Dream that he was now apart of – just like all his friends.  He was so excited to call back home and give the good news to mom & dad!  Life was good being naive.  Rainbows and sunshine everywhere :)

Don’t be like that old J$, okay? He still may be one crazy mother f’er up in here, but when it comes to owning a home he’s come to realize it’s certainly no joke. Learn from his stupidness and always do your research when it comes to making huge choices – especially the biggest ones of your life!  It’s not as fun or exciting (or even quick, for that matter) but it’s much better to find out what you’re getting into sooner, rather than later.  I just thank the high heavens we can still AFFORD this mistake decision of ours!  I’d like to bitch and moan about not getting the lowest rate out there right now (I think it’s 4-something%?) but I feel like we just dodged a bullet years in the making.  And for that, I am eternally happy.

Now… on to figuring out what to do with that “extra” $2,000 laying around ;)

———-
PS: I never thought I’d say it, but Amortization is sexy too!!!

(Photo by jelene)


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{ 40 comments… read them below or add one }

1 Jake Stichler - Debt Sucks May 16, 2011 at 6:45 am

WOW!!! Not only did you actually manage to do it, but with a pretty damn good improvement over the old, too! Congrats! I’ll just go back to my little dream land of never having to need a mortgage in the first place….

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2 Dani @ Ok, Dani May 16, 2011 at 7:32 am

HOORAY!! What an improvement. Good on you!

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3 Kevin May 16, 2011 at 8:37 am

Congratzzzz on the Re-Fi… Its always nice when the banks throw something good your way. Now have some fun w/ that 2k :-) I hear TRYST in vegas is a good time or you could just invest it… (but you only live once and who wants the safe bet, roll the dice)

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4 No Debt MBA May 16, 2011 at 8:55 am

Congrats! It’s nice to keep the same payment but know some of it is actually going to principal. I’d “pay” your mortgage as usual this month and savor the sweet knowledge that you own $1941.42 more of your house and will pay a lot less in interest.

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5 Brandi May 16, 2011 at 8:59 am

Congrats J and Mrs. J!! That’s awesome :)

I can’t wait to buy a house…of course…at the rate I destroy cars it’s probably best if I just live out of a cardboard box!

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6 Kevin @ Thousandaire.com May 16, 2011 at 9:23 am

Back when you had an interest only loan, I couldn’t take you seriously as a financial blogger. Thank you for fixing that situation. :)

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7 Sense May 16, 2011 at 9:27 am

congrats!!! i know that your house has been dragging you down for a while…nice to see that not only has the economic situation changed enough that you can re-fi, but that your situation got better, too! happy dance!

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8 Trinnie May 16, 2011 at 9:50 am

YAY! and the numbers still look amazing written down, too! :) I’m excited for you guys, not only for dumping that interest-only loan (I can’t even say those words w/o my knees buckling) but also having that $2k in extra funds!

Yeah, when we were doing our original mortgage, the husband and I pretty much flat out decided that if we couldn’t qualify for a 30-yr conventional, then obviously we weren’t ready to buy. No way was I going to do a variable or other type of un-conventional loan…just a little too scary for me…

Congrats, again, J$! I’m sure you’re gonna sleep better now! and yes, Amortization is mega-sexy!

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9 Taylor in TX May 16, 2011 at 10:24 am

I would take the $2K and put it towards the mortgage, plus the change lying around your house. It’s not “extra” money – it is just a deferred payment. 29 years and 11 months, from now [when you have kids/grandkids] it will be the payment you don’t have to make.

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10 Sam May 16, 2011 at 10:41 am

Big congrats! Use that free $2,000 and pay down principal!

Really good to hear Chase stepped UP! Amortizing does feel damn good.

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11 Rafiki May 16, 2011 at 10:42 am

Congrats man. Who would have ever thought that Chase would have refinanced your mortgage with them. Show’s they are still good people out there or people with a good business head. Anyways congrats man. Big improvement.

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12 Katie May 16, 2011 at 11:58 am

Congratulations! Now are you actually “buying” a home, instead of just “renting” it from the bank! :)

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13 J. Money May 16, 2011 at 12:26 pm

Thanks everyone!! Sure know how to make a brotha smile on this beautiful Monday Morning :)

@Jake Stichler – Debt Sucks – Haha, thx dude! Next I’m workin’ on coming to join you in that dream land!! Only thing better than this would be selling our house altogether ;)
@Dani @ Ok, Dani – Thanks Dani!
@Kevin – Haha, I WISH I could do that w/out feeling bad about it! No way in hell though – I’d be miserable the whole time I was blowing that away… one of the cons of being a financial nerd, I suppose ;)
@No Debt MBA – I know, that’s def. the smart move, isn’t it? Right now I’m learning toward topping off our Emergency Fund first ($600 to get it back to $10k) and THEN applying the rest back on to the mortgage. But we’ll see… I’m just enjoying the possibilities now going through my head – it’s fun!!!
@Brandi – Awwwww, well you can come buy our house from us if you’d like? Let’s trade for a year! :)
@Kevin @ Thousandaire.com – HAH! So now I have some street cred, eh?
@Sense – Woohoo! Happy dance indeed!
@Trinnie – You know, even though interest-only is scary and everyone beats up on ‘em, I still think it could be good for some people. But only those who know what they’re doing 100% and won’t be tempted to NOT pay extra toward the principal each month. We were good half the time paying off a little here and there, but overall we (or, I should say I) def. slacked on enforcing it. So I’m glad I learned from it before it got too out of hand ;) And again, would never be here typing this if we didn’t get that loan in the first place! I can’t hate on it too much. (but hell yeah I’m happy with the new one!!!)
@Taylor in TX – Haha, ain’t that the truth. But if I have a mortgage in 29 years I’m going to be P-I-S-S-E-D. I either want it paid off in 15-20, or I want to be renting again and avoiding the hassle altogether ;) Or maybe I’ll just buy a lot of land instead so nothing ever breaks! haha…
@Sam – Thanks bro :) Yeah, a big chunk of it, if not all, will be going to the principal for sure. Appreciate the love!
@Rafiki – Thank you! And so true. I will say I have a higher appreciation for them, even if it was mostly business-related. They def. want to keep their customers happy!
@Katie – Haha, true that. Although I’d gladly give back the house to the bank if they want it ;)

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14 Jennifer Lissette May 16, 2011 at 12:49 pm

Ah, this story is super inspiring. My husband was much like the old J$ and since he made so much more than I did, I deferred to his judgement buying a house. Which is how we ended up in an 80-15, with the 1st mortgage being a 10-1 Interest Only ARM at 6.25%

Since I’ve taken over the finances we’ve paid off the second mortgage in its entirety and paid off 7.5% of the principal on the first mortgage… but we’re still underwater. I’m looking forward to the day that we get that mofo down far enough to refinance. Man, that will be sweet.

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15 Jenna May 16, 2011 at 1:01 pm

Congrats!! I can’t imagine being in an interest-only loan and seeing my mortgage balance go *nowhere*! Since I’m just a year and a half into mine, only a small portion of my payments are going against my principal, but I love to see the small decrease each month, knowing that it’s more equity *that I own* in my home!

I like your plan of “re-funding the e-fund” then throwing the rest at the mortgage. Might as well get all your ducks in a row first. Even that $1.4k will expedite your equity gains each month after that!

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16 Jen May 16, 2011 at 1:13 pm

Yay! That’s so awesome that you two could finally refinance. Have you figured out how much overall you guys will be saving yet?

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17 lam91897 May 16, 2011 at 1:14 pm

I was just able to refinance my 30 year Conventional at 6.375% to a 20 year at 4.875%, I have very little equity left (had over 20% when I purchased in 06) and was able to use one one of the federal programs to refi without PMI. Yeah. My payment acctually went down $10.00. I will be able to payoff my condo before I retire.

Investigate with your current mortgage company or other companies what your options are before rates creep up. I never would have even asked about refing if I had not seen someone mention the federal programs in another blog.

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18 J. Money May 16, 2011 at 1:24 pm

@Jennifer Lissette – WOW though!!! Knocking out that 15% 2nd mortgage?? Incredible!! We still have ours (at 20% – yikes!) but % has been so low that we’re barely spending anything. Our interest is literally like 2-something% – crazy. It’s variable now, but we gotta lock it in soon before things start going back up. Whenever that is… either way, I’m proud of you all for killing yours!! That is inpsiring to me :)
@Jenna – Yeah! You’ve paid off more of your loan in 1 1/2 years than ours in 4 ;) haha… When I heard $300 something was gonna go toward principal every month I was like, “Come again?” I didn’t realize *how much* went to principal like that, I always figured only like $100 or so would in the beginning. Obviously I didn’t know what the F I was talking about ;) But times are a changing, my friend!
@Jen – Yeah we’ll be saving at LEAST $320 every month going forward :) And since we’re now under amortization, it’ll be more and more every month, baby!
@lam91897 – WOW. That is a HUGE difference!!! In both interest rate and yearly terms. I’d do anything to be able to grab that ;) If we had boughten smaller and more within our means from day 1, we probably could have! Lesson learned though. Congrats on your killer refi :)

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19 Maria May 16, 2011 at 1:42 pm

I also have a mortgage with Chase. It was a fixed 30-yr at 6%. I had asked late last year if they would allow me to refinance so I could get a lower rate and they kept saying no.

Well, in early March this year I received a letter offering a refinance deal for a fixed 30-yr mortgage at 5.375% and NO closing cost – that’s zilch, nada! I checked with them only about 100 times to make sure. Everything sent smoothly…and quickly; it was finalized within 3 weeks. I save about $180 each month, which I just pay towards the principal. I’ve also been paying additional principal payments for the last 2 years. If I can continue to do this I can pay my mortgage off in 15 years, 1/2 the time. There’s no penalty for early settlement of the loan.

Now, if I wasn’t paying this off early this would not have been a good move, since I was already 7 years into the first mortgage and refinancing over 30 years, even with a lower interest rate, ends up costing me more in interest.

I also tried to get a lower rate but no one was interested so I took this and am happy I did.

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20 Ashley @ Money Talks May 16, 2011 at 2:16 pm

amortization is super sexy! Love it. Glad you got out of that horrible mortgage. :)

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21 christina h. May 16, 2011 at 2:55 pm

HUGE congrats! Question: Did Chase do a walk through of your house? We’ve been lightly considering a refi (we have the EXACT same interest rate that you had!), but we’re doing some renovation to our first floor and it doesn’t look so hot right now. It will in six months, but I know that any mortgage person would run screaming at the moment.

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22 retirebyforty May 16, 2011 at 5:14 pm

Great JOB! It’s a huge win to convert to a 30 years conventional loan.
Did you get the 1% back? I think if you have a Chase checking account with auto payment, you’ll get 1% of the payment back.
I have a mortgage with Chase too and I just learn about this deal. I already financed in 2009 though so I don’t qualify for this.

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23 Jenna, Adaptu Community Manager May 16, 2011 at 5:38 pm

Congrats! Congrats! Congrats!

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24 South County Girl May 16, 2011 at 5:45 pm

Congrats dude… I want to throw my fist up into the air for you right now and jump up and down! Take the blessing and roll with it… and never forget the lesson you learned along the way.
Many people in your situation would have walked away from their homes… especially since you didn’t put anything down and were essentially “renting it” with your interest only loan…

I’ve learned a lot when I bought my condo… there may be things I wish I would have done differently, but I’m so glad I have a home… because amortization is sexy!!!!

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25 Kevin May 16, 2011 at 5:54 pm

Sounds like the same thing I am doing right now as well. Chase called me recently to talk about the refi option. I too found the call odd because I had been denied by Chase and others when trying to refi. I am rebuilding my credit and while I have made great improvements on my score I wasn’t quite there yet. I asked about why the change of heart and they mentioned that under the HARP program which is part of the Making Homes Affordable Program, I was able to qualify for a streamlined refi. I was originally denied because my loan did not originate with Chase. The origination requirement was changed recently. With this refi your credit score doesn’t matter as the rates have limits based on the program, they do an electronic appraisal, and the underwriting process is streamlined.

From what I understand the requirements for HARP is that the loan is backed by Fannie Mae or Freddie Mac, Your mortgage balance cannot exceed 125% of your homes value, and you are not in financial hardship and are current on your payments. This is great for people who are upside down on their homes and can’t refinance or in my case I was able to use the program to take my current interest only loan and refi into a 30 year fixed at 5.1% while still rebuilding my credit.

Making Homes Affordable Program
https://www.efanniemae.com/sf/mha/mharefi/

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26 duddes02 May 16, 2011 at 6:44 pm

Great job! I used to work for a mortgage company and I agree that you got suckered into the 1st loan. I’m so happy that you got out of it!! congrats

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27 JoeTaxpayer May 16, 2011 at 8:02 pm

Well, congrats. In my perfect world (you know, the one where the beer bottles are selfrefilling) they’d have skipped the closing costs, but the 5.5% is pretty good.
I’d not pay extra so soon, see what the first 6 months looks like. In this economy, I like the idea of letting the emergency account swell. Remember, you can always write that check. Just for laughs, you should see how long it will take to get to 80% LTV, that’s when the no closing refi would currently get you under 5%. Keep topping off those retirement accounts.
See you in October. I hope.

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28 Paula @ AffordAnything.org May 16, 2011 at 9:42 pm

Wow, your new mortgage is SUCH a better deal!! Congratulations!

I’m surprised by how different the “old” and “new” J. Money are … it shows how much you’ve learned/grown in the past 4 years!

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29 Jasonk May 17, 2011 at 6:20 am

Congrats J$.

I’ve been following you for a bit. Great news!

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30 J. Money May 17, 2011 at 10:57 am

Boy, I wish I could Refinance EVERY week! Haha… feelin’ the love, feelin’ the love ;)

@Maria – That is WONDERFUL news!!!! Isn’t that crazy? We fight and fight to get something to work, and then randomly out of the blue they just hand us over a plate full of money like that? It’s crazy. But I love love love it ;) Congrats on workin’ it so you can have it free and clear after 15 years, I admire you! I don’t have the energy/desire to do that as yet, but I’m sure it’ll creep up on me soon.
@Ashley @ Money Talks – Thank you kindly ;)
@christina h. – Haha, nope! Everything we did was on the phone or via email – that’s it. They didn’t even send an appraiser out, which I was kinda hoping they would so I can get a better estimate of its worth ;) They said they had their own valuation method that works in cases like this (I guess since they already know about my house from doing the first mortgage years ago?). So you should be all set. Although, actually they DID come over to the place to do the final closing, but we had the option of going to their offices too. We were just lazy and didn’t want to fight the traffic ;) Maybe you should give them a call and see what they say? Then we can become refi twins like that, haha…
@retirebyforty – What? No but now you have me wondering! haha… we did get a lot of credits though, so we were pretty happy with the way it turned out. Especially since we weren’t in the place to negotiate ;)
@Jenna, Adaptu Community Manager – Thank you, thank you, thank you!
@South County Girl – Haha yay!!!! And no way I’d walk away from our home, that’s just crazy… especially if I can actually afford it! It would be one thing if our income was cut drastically or suffered some horrible stuff which made us not be able to pay it, but even then we’d find a way to sell it or unload it w/out foreclosing or filing for bankruptcy. It drives me mad hearing when people do that when they have the money but they just don’t feel like dealing with their consequences!!
@Kevin – Nice! Congrats man :) And great great info too – I’m sure that played a part in our refi as well. You got a better rate than we did, even though our credit score is real good!!! Haha… well done, sir.
@duddes02 – Thanks dude :) I guess that was the only way for us to be able to “afford” a house in the first place. We couldn’t buy it at a 30-year fixed back then cuz we didn’t have the money! haha… what a world.
@JoeTaxpayer – Yeah, I really wish we could have gotten a lower rate, ESP since we both have credit scores above 750, but I guess it just wasn’t in the cards as yet. Had to fight for what I could get! :) And would love to meet up in October man, that would be sweet. Thx for stoping by buddy!
@Paula @ AffordAnything.org – Haha, thanks. Mostly due to blogging and reading! :) Crazy, huh?
@Jasonk – Thanks bro!! That means a lot – appreciate you reading after all this time :)

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31 Penny Frugalista May 17, 2011 at 12:54 pm

Definite improvement with the refi. Congrats! I’m with Joe Taxpayer — I wish Chase had skipped the closing costs (especially since your original mortgage was through them), and I agree on holding off on paying extra and padding your ‘oh shit’ fund instead.

We got a sweet 5% interest rate on our 30-year mortgage two years ago, but we also did a 20% down payment.

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32 Crystal May 17, 2011 at 2:54 pm

Chase did this for us too!!! I had just given up and then we got a package saying that Chase was offering to refinance our 15 year 5.375% mortgage to a 15 year 4.5% mortgage with NO CLOSING COSTS! Woot! Here was my post: http://www.budgetinginthefunstuff.com/mortgage-refinancing-our-personal-story/

Congrats!

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33 J. Money May 17, 2011 at 8:37 pm

@Penny Frugalista – Yeahhh, having a down payment def. helps out! I did get a cple G’s knocked off the closing costs, but not everything I’m afraid. Just still shocked it all worked out in the end!
@Crystal – Dang girl!!! 15 years??? You are killing it!! Very very impressive – going over now to read :) Congrats!

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34 Ash May 18, 2011 at 3:19 pm

Congrats, J$! I’m happy for you.

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35 J. Money May 18, 2011 at 3:34 pm

Thanks Ash!

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36 Andrea May 18, 2011 at 11:24 pm

Dude you must be thrilled… also pretty nerve wracking though right? I’m refi’ing this week and reading your post makes me realize how fortunate I am in Canada where things have been a bit more regulated. A 30year interest ONLY mortgage? Man, I’m so baffled at that idea I don’t even know what to say… you know, I now they exist and I’ve read about them but to really read a personal story. Crazy.

I’m refi’ing from 5.35% to 4.something, no penalties, funny thing is that as i was about to call my branch to make an appointment to talk things through, they also asked me ‘Hey have we talked about your mortgage with you lately?’ pretty sweet, I’m waiting on the final paperwork, hopefully get the call tomorrow. saaaweet! Congrats again.

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37 Andrea May 18, 2011 at 11:26 pm

by the way some of those ads popping up on the top right are… errr. I got a fake Facebook type ad with a girl ‘want to meet me’ accept or ignore. Kinda tacky but I’m guessing you don’t quite control the contents of every ad.

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38 J. Money May 19, 2011 at 10:28 pm

Yikes! Sorry about that – Adsense throws up some rando’s sometimes :) I try and nix the horrible ones but then new ones pop up! haha… usually they’re decent though.

RE: Refinancing – that’s GREAT!! I just read about someone else’s mortgage in Canada and was blown away at the terms – so good! Y’all are smart too not having interest-only and the rest of our cazy concoctions ;) I actually didn’t mind ours at first, but over the last two years it started irking me. But not anymore!!! Yay!!!

Good luck on your refi – and congrats to you too! :)

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39 lana August 14, 2011 at 4:40 pm

Good to see you got a conventional loan. The past two times I’ve refinanced have been 100% free! I had called Wells Fargo, and never got a call back. Then one day they called me and asked if I would like to refinance and they would pick up the tab.

I had always heard that if you refinance, it should be for at least 2% less. So that it can pay for itself in the long run.

We hope to pay off our house next year. I’m still 20 years away from retirement. So we can sock away some cash, hopefully without having a mortgage.

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40 J. Money August 14, 2011 at 9:44 pm

NICE!!! That is awesome to be able to pay off your mortgage so soon – congrats :)

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