We refinanced our mortgage!
June 6, 2016
Last year, we managed a tidy prepayment on the mortgage and I was hooked on the taste of paying it DOWN.
DRUMROLL PLEASE
After more than five months of painful paperwork and terrible service, we finally refinanced our dang mortgage!
The process
I shopped rates on BankRate, with Quicken Loans, Bank of America, Chase, Citi, SoFi.
The lowest possible rate offered was on a 30-year 7/1 ARM at SoFi. My internal conflict raged: a very low interest rate equals big savings and a huge increase in cash flow. But an ARM? I’m a low-to-moderate risktaker and at first, the idea that the rate increase could spike to nearly 8% in Year 8, while symmetrical, is risk that I wasn’t sure I wanted. Partly because of my love for maximum savings, I was 80% sure that the ARM was the right way to go and 20% an irrational worrywart because of the high ceiling on the allowed rate increase.
Cut to a scene of me doing calculations on ARMs vs fixed rates like a squirrel hopped up on an illicit stash of nuts.
The math showed that I was right. Even if we only paid the new, low, monthly payment for the next 7 years, in the worst case scenario of the interest increasing to 7.5%, the monthly payment would still be a couple hundred dollars less than what we pay now. In the meantime, our new monthly payment would be under $1000 per month and the interest rate? Under 3%.
A review of SoFi Mortgage
Hands down terrible. Absolutely NOT RECOMMENDED.
StackingPennies had described her experience refinancing her student loans with Earnest: “It was very much a Silicon Valley company designed for millennial who can’t stand bad web design, inefficient processes, or too many phone calls.” SoFi and Earnest are competitors in the same market so I assumed they’d be competitive. I also gave them a shot because several friends had praised them for their student loan refinances.
My experience with them? Awful. No good. Very Bad. I had a better time of it when I bought our investment property with a long distance broker and a traditional lender. They were the total opposite of what I expected.
I asked them to conduct everything by email because I needed everything in writing and my work doesn’t allow for me to stop for phone calls. It took three phone calls and three weeks to get them to comply with this one request. Meanwhile, they kept badgering PiC by phone. Why? I don’t even know.
Their email communication was like risque summer wear: barely there, and totally unprofessional when it did show up.
One of the weeks when we were in contact, we exchanged more than 20 emails because the assistant couldn’t possibly manage to ask me for a complete list of required documents. She had to ask for nearly 20 documents across 7 emails. You’d think she was being paid by email volume. The rest of the time, she was so unclear in her terminology I had no idea what she was asking for. Then she couldn’t possibly make sure that all the files she requested had a home for upload on the submission site. Then the submission site was a total jerk and would eat some of the files that I uploaded.
They kept getting important details wrong, and giving me important information too late. They’d send random clutches of documents for signatures without any explanation. Without fail, they’d ask me for documentation at absolutely the latest possible time to ask and then rush me to supply it. As if I don’t have a full time job, by virtue of which I qualify for the dang loan, and just sit here chewing on my nails, nervously awaiting the next email to fulfill their desires.
Can I remind you that it took nearly half a year to complete this? My last mortgage took less than 20 days to finalize from the point of agreement with the buyer to closing.
It’s like the alien wearing Edgar in Men in Black II. They superficially look like a modern, tech-savvy, version of a mortgage company but the skin barely covers up the fact they are really not human.
Go figure – when I shared my frustrations with some friends, half a dozen told me that they hated SoFi’s mortgage side too. Every complaint I had was echoed, and in some cases, they definitely had it worse. A few of them abandoned ship when they were in their 4th month. I can’t blame them.
The end result
It’s OVER. If I’m lucky, if I work these cards right, the next time I have to talk to them is when we pay off the loan. Wait, I’d better not have to talk to them then. Just send me that dang title.
Our mortgage is now a sane amount.
I’m happy the refinance is concluded but that took so long, I’m ready for the next phase already. Which is what?
Now I take advantage of our extra cash flow to pay down the mortgage even more! My goal is to throw at least $70K in extra payments at the loan over the next 7 years, assuming stable income over that time.
If we manage that, we’ll be within $100,000 of payoff.
There remains the question of whether we might attempt to buy a larger home during that time. We’d both really like a bit more room but it doesn’t feel realistic. I stalk the market monthly. The prices just keep going up, and quality isn’t in line with the cost. We can’t find anything that gives us enough space to warrant a move but also isn’t a dump for under $1.5M. I don’t yet see where I make room in our current budget to save 40-60% of a greater than $1M amount in less than 7 years. (I refuse to take out a jumbo loan.)
I’m also unsure I want to start over with a new mortgage – we’ll be so close to paying this one off! I’d love to be mortgage free and stay that way. Contrast that against my love of more dogs and hope for more space (but not too much) … I’m not sure yet which will win out.
:: Do you have an ARM or a fixed-rate mortgage, or no mortgage at all? What’s your dream home goal? Are you a someday owner or a forever renter?
Congrats on finally getting the refinance! I know you’ve been looking forward to it for a while. 🙂
I’m on a 30-year fixed-rate mortgage. I figured my loan was a bit too large for me to be fully paid off in 7-8 years, so I chickened out on getting an ARM. In my ideal world, we’d be living in the next town over in a 3/2 condo by the university. But, alas, $$$.
Thanks!
Alas $$$ indeed!
We started out with a 30-year fixed and have refinanced twice. Now we’re in a 25-year fixed, but we got a lower interest rate both times (and it wasn’t bad to start with), and we’ll pay it off a year ahead of the original loan. Neither one of us had any confidence that we’d be able to pay off an ARM, and as our circumstances changed, it turned out we were right about that–we’ve had significant expenses that we could not anticipate, and there’s no way we could have made additional payments.
Did the lower rate significantly affect your monthly payment as well? I was surprised how much difference it made for us.
And don’t forget property taxes going up. Prop 13 is a sweet deal if you stay put.
We talk about our mortgage today, though we are currently renting temporarily out of state.
Property taxes, argh! Yes, ours are almost reasonable compared to others around here.
We have an ARM. Here in Australia you can only get a fixed rate for a few years and interest rates didn’t look like going up so it didn’t seem worth doing. So here no-one is freaked out about adjustable rates, it’s just considered normal. We just bought this house at the beginning of last year for $A740k (USD 530k) with a 20% downpayment. Though the block/land parcel it is on is small (400m^2) it is surround on two sides by open land with trees and so seems much more spacious. So, I don’t know if we’d want to buy a house if more land further down the track, but that would mean moving back towards the city centre paradoxically where the land was subdivided into larger blocks than are normal in these newer suburbs. And so the price would be higher. Certainly over $A 1 million for anything as nice with more land, which is why we bought here in the first place…
Now that’s an interesting tidbit – I love discovering how things are done differently elsewhere. I wonder how we’d approach loans here if ARMs are the norm, it certainly took a lot of mental spinning to settle down and be ok with the ARM.
Do you know why they subdivided the land smaller out in the suburbs?
Those home prices you’re quoting make me really, really glad to live in the southeast.
We have an ARM through our credit union. They had a reasonable process and we know they won’t sell it to anyone else, we still have a low rate and there are limits as to how fast and how much the rate will rise.
You’re welcome? 🙂
Yes with our ARM it can change every year starting from the 8th year on, but I focused the worst case scenario and even then we’ll be ok. It won’t be great if it actually jumps to more than double the rate but it won’t be more than what we pay now. How frequently can yours change?
It can go up by a half point at 2 year invervals if the Prime is up (with a cap at 8, I think) but we just passed the 6 year mark with no rise and so we have 2 years before it might rise again.
I can’t believe it took 6 months! Sorry to hear the experience was so bad – was the rate low enough in comparison to the other quotes that it was worth it? Student loans are an easier thing to deal with than the complexity of real estate. They basically just had to verify that I was likely to be able to pay it off.
Every month that passed, I was thinking “I can’t believe it took X months and we’re STILL NOT DONE.” Both the rate and monthly payment were low enough that I wanted them enough to just see it through, but not low enough to not gripe about it. 😀
Care to share which tools you used to analyze that adjustable rate? A quick search for an adjustable rate calculator resulted in a bankrate.com tool that didn’t seem to calculate what the payments would be over a 5/1 ARM. (It quoted a mortgage payment of 10k a month on a 5/1 loan under 500k at less than 3%, so something isn’t right).
I really thought I’d enjoy being a renter, but that hasn’t been the case. I’d like to be able to make my own calls for maintenance and get stuff done without the additional layers of a property management company, owner approval, etc. That dynamic really didn’t work for me over the holiday weekend when I had to get through 10 hours without a working toilet in the house, and missed 95% of the ($$) music festival that day waiting around for a call back from the management company. (Trying to get ahead of such a problem by reporting plumbing issues two weeks in advance got me nowhere.)
Unfortunately, I’m stuck now since I can’t afford to buy in the area that works best for my job and lifestyle. I’m not interested in adding more to my (occasional) commute time and paying a big mortgage every month on a property that I don’t like at all. Yeah, I did this to myself by moving to a more expensive place. I keep reminding myself that not getting my extremities frozen or shoveling snow (not to mention sweltering in the humid, sticky summer and dealing with increased taxes and fewer services in a bankrupt state and city) is worth this. And it is. It’s just hard looking around and realizing that if I’d just moved out here 3 years ago I’d be sitting pretty in a house located right where I want to live. *sigh*
Let me see if I can hunt down that spreadsheet I used. I liked it a lot but I’m not sure what I did with it in the after-refinance euphoria 😀
Normally renting is supposed to spare you the pain of dealing with that crap but your experience during the music festival was the pits! I’d be right there with you on preferring to buy in that case.
Hindsight 🙁 I feel the same with some financial decisions we made.
I can’t handle ARM risk. That turned out to be an excellent choice now that we can’t touch Tim’s disability check. Blech. Sometimes I grumble that Tim’s teeth are costing more than 1/3 of our current mortgage balance. Then I remember how lucky we are to have such a ridiculously low mortgage.
Sorry SoFi was such a PITA. I saw them at FinCon and they were pretty convincing. Try not to cuss them out at FinCon if they have a booth there this year. Or at least not while I’m standing near you.
I’ll tell you to turn your back if I’m about to say something unforgivable, give you plausible deniability.
6 months, that’s crazy!
5 years is the longest term you can fix for here. I have a post coming up on my mortgage, but the longest term I have any of it fixed for is 3 years.
Have you ever used a broker? Would be curious to hear your thoughts on that. I used one (even if I hadn’t been concerned about my mortgagability due to the financial clusterfuck that has been my life recently, I wouldn’t have wanted to tackle it on my own) and they got me discounted rates. I think I’ll definitely use one again when I refinance and see how that goes.
I have used a broker once for a primary mortgage and in that case it wasn’t helpful for discounted rates but it was helpful in the work part. The whole thing went very smoothly, nothing at all like this 🙂
Good stuff. We’re on a 15-year fixed rate. We got lucky and got in when the rates were at about their absolute lowest.
Now that’s an ideal loan! I’d hoped for a 15 year fixed and had to settle for the ARM.
Yay! So long in the making! Glad for you that it is finally over.
Now we just need to hear about the car buying! 🙂
Thank you!
Hah, yes, I have to tackle that recap soon 😀
You’ve mentioned the price of other homes, maybe I missed it but how large is your house compared to those and when did you buy it? We bought our house in 2001, very lucky! Second house in 2005, very bad timing. We have a 10 year fixed rate and pay a boat load but our interest rate is just above 3 and I’m very hopeful we are three years from completion.
I’m glad this is finally behind you!
Thanks!
Ours is a smaller by at least one bedroom and a decent sized yard, and probably about 500-700 square feet. This one was bought about 8 years ago when the market was “down” (as down as it gets).