So, I finally have gotten all our supporting paperwork together for our Refi. Below is a list of documents and information that we had to provide:
Salary and Taxes:
W-2 for both of us for 2009, 2010, 2011.
Copies of our tax returns for 2009 and 2010
Copy of the extension form we filed with the IRS for 2011 taxes
Pay stub for each of us
Procedures and contact information for employment verification for each of us
Refinance Property:
Recent mortgage statement
Last property tax statement
Insurance declaration page for hazard and windstorm
Survey
Other Properties:
Recent mortgage statement for each investment property
Last property tax statement for each investment property
Insurance declaration page for hazard and windstorm for each property
Rental lease for each investment property
Accounts:
Two months of bank statements for each Wells Fargo checking and savings account
Two months of bank statements for each ING savings account
We also had to provide an explanation for each deposit in excess of $1,000.00 that was not a direct deposit. Which for us meant we had to explain rent deposits and transfers between Wells Fargo and ING (where we keep most of our savings).
Misc.:
Copies of our drivers' licenses
Documentation as to the status of any address that were associated with our names from credit search, meaning we had to provide dates of residency and/or whether we had any ownership in the property. I was surprised to have my parents' home address come up, its been a long time since I vacated my childhood home.
It was a lot of documentation, more documents than when we refinanced in 2009, but all the work will be worth it if the house appraises for the magic number and we can get this great rate.
Monday, July 16, 2012
Friday, July 13, 2012
Refinance Part 4
We were supposed to go away this weekend, but instead we'll be spending the next three days on shining up our home to put it in the best condition possible for appraisal (which we assume will be next week). Mr. Sam is working from home today and he already has his crew working on the outside projects.
This is our list of projects:
Outside:
1) Remove old mulch in back and front yards and replace with new mulch (we've had this mulch in for a year plus so its started to break down and turn into dirt).
2) Power wash all walks.
3) Weed and trim up any plants as necessary (we did a big trimming project a few weeks ago, so we are ahead of the game on this one).
4) Get rid of any mold on the house and carriage house (we are in Florida, after a while mold starts to grow on the sides of the home that don't get a whole lot of sunshine).
5) Paint touch up as needed.
6) Wash windows.
7) Fix a couple of sprinklers.
8) Fix fence in back yard and back yard gate.
Garage:
1) Clean and organize garage.
Inside:
1) Make sure everything is put away, including in the office (our dumping ground) so I'll need to catch up on filing which will take a few hours at least.
2) Super clean the house, vac, mop, dust (including things like art and photos, every ceiling fan, A/C vents, light fixtures, plantation shutters, etc.), scrub kitchen (wash windows on kitchen cabinets) and baths, wash base-boards, get rid of scuff marks on walls and base boards. We don't have a cleaning service, as much as I'd like one, and with our works hours our house is generally tidy, but not super clean most of the time.
3) Complete headboard project for guest room.
4) Replace any light bulbs.
5) Trip to Goodwill to get rid of donation stuff sitting in master bedroom.
6) Tidy up closets.
7) Fix light fixture in mater bedroom sitting area.
This is our list of projects:
Outside:
1) Remove old mulch in back and front yards and replace with new mulch (we've had this mulch in for a year plus so its started to break down and turn into dirt).
2) Power wash all walks.
3) Weed and trim up any plants as necessary (we did a big trimming project a few weeks ago, so we are ahead of the game on this one).
4) Get rid of any mold on the house and carriage house (we are in Florida, after a while mold starts to grow on the sides of the home that don't get a whole lot of sunshine).
5) Paint touch up as needed.
6) Wash windows.
7) Fix a couple of sprinklers.
8) Fix fence in back yard and back yard gate.
Garage:
1) Clean and organize garage.
Inside:
1) Make sure everything is put away, including in the office (our dumping ground) so I'll need to catch up on filing which will take a few hours at least.
2) Super clean the house, vac, mop, dust (including things like art and photos, every ceiling fan, A/C vents, light fixtures, plantation shutters, etc.), scrub kitchen (wash windows on kitchen cabinets) and baths, wash base-boards, get rid of scuff marks on walls and base boards. We don't have a cleaning service, as much as I'd like one, and with our works hours our house is generally tidy, but not super clean most of the time.
3) Complete headboard project for guest room.
4) Replace any light bulbs.
5) Trip to Goodwill to get rid of donation stuff sitting in master bedroom.
6) Tidy up closets.
7) Fix light fixture in mater bedroom sitting area.
Wednesday, July 11, 2012
Refinance Part 3
In applying for our mortgage refinance it is always eye opening to take a look at one's credit report and score.
My credit score was 799. A score of above 760 is considered excellent and normally the best rates are provided to individuals with a score of 760 and above. Of course I wondered why my credit score wasn't in the range of 800-850. Talking with the mortgage broker he mentioned the fact that I don't have very much credit available to me since I only have one credit card with Chase which has a limit of $8000. My score would actually improve if I had additional regular credit cards (of course it would go down if I applied for new credit right now).
Mr. Sam had a range of credit scores from 706-720s. A score of 700 -759 is still considered great, but what was holding him back from joining the elite with me. First, he has a medical bill collection for $160. To me it is crazy that a tiny medical bill can ding the score like that, but that is the way it works, because it is counted as a collection regardless of the amount. Second, Mr. Sam has no regular credit cards, he does have a Home Depot credit card, but store cards don't count the same way as a regular credit card.
My credit score was 799. A score of above 760 is considered excellent and normally the best rates are provided to individuals with a score of 760 and above. Of course I wondered why my credit score wasn't in the range of 800-850. Talking with the mortgage broker he mentioned the fact that I don't have very much credit available to me since I only have one credit card with Chase which has a limit of $8000. My score would actually improve if I had additional regular credit cards (of course it would go down if I applied for new credit right now).
Mr. Sam had a range of credit scores from 706-720s. A score of 700 -759 is still considered great, but what was holding him back from joining the elite with me. First, he has a medical bill collection for $160. To me it is crazy that a tiny medical bill can ding the score like that, but that is the way it works, because it is counted as a collection regardless of the amount. Second, Mr. Sam has no regular credit cards, he does have a Home Depot credit card, but store cards don't count the same way as a regular credit card.
Tuesday, July 10, 2012
Refinance Part 2
I posted earlier this week regarding our refinance research, we have decided to apply for Refi Option #1. I just spent the last hour on the phone with the mortgage broker filling out a mortgage application. The process is much more document and information intensive than the last Refi in 2009. We've got quite a bit of work to do to put all the information together that we need to return to the broker this week.
So, at present we have locked in a rate of 2.75% fixed on a 15 year term with closing costs of about $2500, plus the $500 mortgage application fee (which includes the appraisal cost). There is no prepayment penalty for the new loan after the first six months. I had to agree to escrow our property taxes, which I am not happy about since we don't escrow, in order to get the best rate.
The lender with the best rate requires a 75% loan to value ratio for Florida. Not surprising, when we refinanced with Wells Fargo in 2009 they required a 70% loan to value ratio (a normal LTV is 80%). Accordingly, we will need our home to appraise at $348,000. The broker has some concerns that it will not appraise for that amount. When we refinanced in 2009, I was sweating bullets but the home appraised for $415,000. I assumed, perhaps wrongly, that our home would appraise for a similar amount this time around because the market is actually better now than in 2009. I guess we'll have to keep our fingers crossed and look for comps to help the appraiser. I do know of one property that is similar size (when you count our carriage house space) that is two blocks away which sold for $400,000 in June but checking the property appraiser web site that sale doesn't yet appear.
So, at present we have locked in a rate of 2.75% fixed on a 15 year term with closing costs of about $2500, plus the $500 mortgage application fee (which includes the appraisal cost). There is no prepayment penalty for the new loan after the first six months. I had to agree to escrow our property taxes, which I am not happy about since we don't escrow, in order to get the best rate.
The lender with the best rate requires a 75% loan to value ratio for Florida. Not surprising, when we refinanced with Wells Fargo in 2009 they required a 70% loan to value ratio (a normal LTV is 80%). Accordingly, we will need our home to appraise at $348,000. The broker has some concerns that it will not appraise for that amount. When we refinanced in 2009, I was sweating bullets but the home appraised for $415,000. I assumed, perhaps wrongly, that our home would appraise for a similar amount this time around because the market is actually better now than in 2009. I guess we'll have to keep our fingers crossed and look for comps to help the appraiser. I do know of one property that is similar size (when you count our carriage house space) that is two blocks away which sold for $400,000 in June but checking the property appraiser web site that sale doesn't yet appear.
Sunday, July 8, 2012
Refinance Research
We have started the process of researching refinance options for our primary home. At present our mortgage balance is approximately $265,000 and we are 4 years into a 25 year mortgage with a fixed rate of 4.8%.
In 2009, we refinanced from a 6+% rate to the 4.8% rate, we paid about $4300 in closing costs with Wells Fargo. Our original loan was taken out in 2004 and was a 30 year term and was with Wachovia. We stayed with Wachovia/Wells Fargobecause the mortgage balance was counted as part of our relationship status with the bank and we received better banking privileges. But, post Wells Fargo/Wachovia merger those advantages have generally diminished and are no longer worth our loyalty.
We are now looking at a 15 year mortgage with fixed rate of 2.75% rate (option #1). Option #1 will cut 6 years off our mortgage term and will save us $181,000 versus our current loan. Our monthly payment will increase about $110 and closing costs will be about $2600.
Option #2 is a 20 year mortgage with fixed rate of 3.25% with the same closing costs of about $2600. Our monthly mortgage payment would decrease by about $185 and we would save about $145,000 versus our current loan.
Option #3 is a 20 year mortgage with a fixed rate of 3.37% with no closing costs. Our monthly mortgage payment would decrease by about $180 and we would save about $140,000 versus our current loan.
Option #2 and #3 reduce our mortgage term by 1 year.
At present we are leaning towards option #1, the monthly costs increase only $110 and we save $180,000 and we are debt free within 15 years (not counting investment property debt which I don't). We can cover the closing costs from our emergency fund or our escrow account (which is presently overfunded).
In 2009, we refinanced from a 6+% rate to the 4.8% rate, we paid about $4300 in closing costs with Wells Fargo. Our original loan was taken out in 2004 and was a 30 year term and was with Wachovia. We stayed with Wachovia/Wells Fargobecause the mortgage balance was counted as part of our relationship status with the bank and we received better banking privileges. But, post Wells Fargo/Wachovia merger those advantages have generally diminished and are no longer worth our loyalty.
We are now looking at a 15 year mortgage with fixed rate of 2.75% rate (option #1). Option #1 will cut 6 years off our mortgage term and will save us $181,000 versus our current loan. Our monthly payment will increase about $110 and closing costs will be about $2600.
Option #2 is a 20 year mortgage with fixed rate of 3.25% with the same closing costs of about $2600. Our monthly mortgage payment would decrease by about $185 and we would save about $145,000 versus our current loan.
Option #3 is a 20 year mortgage with a fixed rate of 3.37% with no closing costs. Our monthly mortgage payment would decrease by about $180 and we would save about $140,000 versus our current loan.
Option #2 and #3 reduce our mortgage term by 1 year.
At present we are leaning towards option #1, the monthly costs increase only $110 and we save $180,000 and we are debt free within 15 years (not counting investment property debt which I don't). We can cover the closing costs from our emergency fund or our escrow account (which is presently overfunded).
The Perils of Keeping Up
Mr. Sam and I live in an eclectic historic small city. Our 1920s era home is large for the era, 2200 square feet, plus we have a detached two car garage/carriage house which provides additional space. For our neighborhood, our home is on the larger end of the scale and, on our street, our home is probably the second largest (by square footage). Moreover, our home is quite nice, it has renovated baths (2) and kitchen. Mr. Sam also does a great job with the yard and landscaping. But, our house is not "perfect", we still have storage projects to undertake (adding clothing and storage closets), we plan to add plantation shutters and we plan to add a bar at some point. We also have less sexy projects in mind, like a new A/C system.
We live in what would probably be described by an outsider as an up and coming hipster type area. We are close to the beach and within walking distance to parks, the library, and a downtown area with shops and bars. The socio-economic mix of our neighborhood is varied, we have lots of retired folks, young families, some snow-birds/seasonal, several gay couples, and some professional families. Overall, in our neighborhood, except for our friends living directly on the water, I suspect that we are on the higher end of the income distributions (two working professionals).
This past weekend, I was with a good friend at her house warming party. This friend, let's call her Jane, and her husband both work in the same profession as me. They are a hard working, dual income, professional couple with three small children. I assume they are both pulling in strong incomes. They recently took advantage of the down real estate market in South Florida and bought a home (built in 2000) that is close to 8000 square feet, with an acre of land, pool, etc.
The home cost them $700,000+ and they have a $600,000+ mortgage on the home. The house is beautiful, but even so they spent 6 weeks renovating the home, painting, installing hard wood floors upstairs, landscaping, minor renovations in the kitchen, minor renovations to downstairs bath and laundry. They spent in the low 5 figures on the renovations.
Six months after they moved in, the house looks show room ready, meaning matching and appropriately nice furniture in each room, large flat screen TVs in several rooms, perfect window treatment, art hung on each wall, etc. You would never know that they just moved into their home.
Jane is a good enough friend that she mentioned, when we were on the house tour, several tid-bits regarding the cost to furnish the home, to paint the home, the increase cost for the lawn service (since they have an acre of land), the increase cost for their house cleaning service (since the home is double the size of their old home), the cost of the pool service, the increase energy costs, etc.
I'm very happy for Jane and her family, they got a great deal on a great house that has the space they think they need as their children grow up. But, I find that these check ins with my peers just reinforces my desire to live small. First, I would hate to live 40 minutes west of the ocean. Second, I would hate to live in a McMansionville community. I like the variety of people that I interact with in my community and neighborhood. I also think I would find myself trying to keep up with the perfect furniture, the house keeper, the fancy, leased cars, etc. that my neighbors all would have. In my neighborhood, we are generally at the top of the expenditure cascade so I don't often find myself keeping up with my neighbors. Our home, while nice still has an empty room, mis-matched furniture and plastic blinds in several rooms (we are saving for plantation shutters as we speak). Third, Jane's level of debt scares me. Yes, we have $570,000+ in mortgage debt ourselves, but $310,000 of that debt is investment properties and the mortgages are being paid by our tenants. Fourth, Jane and her husband have just engaged in major lifestyle inflation, they have increased their monthly costs (putting aside the mortgage) for utilities, taxes, insurance, up-keep, etc.
We live in what would probably be described by an outsider as an up and coming hipster type area. We are close to the beach and within walking distance to parks, the library, and a downtown area with shops and bars. The socio-economic mix of our neighborhood is varied, we have lots of retired folks, young families, some snow-birds/seasonal, several gay couples, and some professional families. Overall, in our neighborhood, except for our friends living directly on the water, I suspect that we are on the higher end of the income distributions (two working professionals).
This past weekend, I was with a good friend at her house warming party. This friend, let's call her Jane, and her husband both work in the same profession as me. They are a hard working, dual income, professional couple with three small children. I assume they are both pulling in strong incomes. They recently took advantage of the down real estate market in South Florida and bought a home (built in 2000) that is close to 8000 square feet, with an acre of land, pool, etc.
The home cost them $700,000+ and they have a $600,000+ mortgage on the home. The house is beautiful, but even so they spent 6 weeks renovating the home, painting, installing hard wood floors upstairs, landscaping, minor renovations in the kitchen, minor renovations to downstairs bath and laundry. They spent in the low 5 figures on the renovations.
Six months after they moved in, the house looks show room ready, meaning matching and appropriately nice furniture in each room, large flat screen TVs in several rooms, perfect window treatment, art hung on each wall, etc. You would never know that they just moved into their home.
Jane is a good enough friend that she mentioned, when we were on the house tour, several tid-bits regarding the cost to furnish the home, to paint the home, the increase cost for the lawn service (since they have an acre of land), the increase cost for their house cleaning service (since the home is double the size of their old home), the cost of the pool service, the increase energy costs, etc.
I'm very happy for Jane and her family, they got a great deal on a great house that has the space they think they need as their children grow up. But, I find that these check ins with my peers just reinforces my desire to live small. First, I would hate to live 40 minutes west of the ocean. Second, I would hate to live in a McMansionville community. I like the variety of people that I interact with in my community and neighborhood. I also think I would find myself trying to keep up with the perfect furniture, the house keeper, the fancy, leased cars, etc. that my neighbors all would have. In my neighborhood, we are generally at the top of the expenditure cascade so I don't often find myself keeping up with my neighbors. Our home, while nice still has an empty room, mis-matched furniture and plastic blinds in several rooms (we are saving for plantation shutters as we speak). Third, Jane's level of debt scares me. Yes, we have $570,000+ in mortgage debt ourselves, but $310,000 of that debt is investment properties and the mortgages are being paid by our tenants. Fourth, Jane and her husband have just engaged in major lifestyle inflation, they have increased their monthly costs (putting aside the mortgage) for utilities, taxes, insurance, up-keep, etc.
Friday, July 6, 2012
Pennies Pay Off Mortgage
A Boston area man submitted 62,000 pennies to make his last mortgage payment on a home he and his wife purchased in 1977. Here is a to the article link.
My first thought is kudos to him and his wife, they have their home paid off before retirement. But, my second thought is why did it take them 35 years to pay off their home. Most mortgages, especially ones obtained in the 1970s were no longer than 30 years. Which means they probably at some point refinanced their home without reducing the term. And my third thought is, I wonder how much they paid in interest over the 35 years. Surely there is something wrong with me or I've been spending too much time trying to figure out if we should refinance our primary home and whether we can get a 3 something interest rate.
My first thought is kudos to him and his wife, they have their home paid off before retirement. But, my second thought is why did it take them 35 years to pay off their home. Most mortgages, especially ones obtained in the 1970s were no longer than 30 years. Which means they probably at some point refinanced their home without reducing the term. And my third thought is, I wonder how much they paid in interest over the 35 years. Surely there is something wrong with me or I've been spending too much time trying to figure out if we should refinance our primary home and whether we can get a 3 something interest rate.
Monday, July 2, 2012
Half Way - Savings Goals
(1) Max out 401k(s) - $19,230 (57%)(goal is $34,000)
(2) Max out IRA(s) - $4105 (41%)(goal is $10,000)
(3) Add to e/r fund - $5200 (52%)(goal is $10,000)
(4) Pay down mortgage - $2490 (50%)(goal is $5,000)
(5) House projects - $650 (13%)(goal is $5,000)
(6) Trading account fund - $50 (1%)(goal is $5,000)
Total - $31,725 (46%)
Well, we are half way through the year and accordingly, we should be 50% of the way done on our savings goals (or $35,827). As demonstrated above, we continue to lag behind on our 2012 goals. At present, we are $4102 behind on our goals.
As I have posted before, we have spent approximately $10,000 on two certification courses for Mr. Sam this year. And, we just paid for a third program, so at present we have $4200 on the credit card*. Accordingly, I am pleased that we are only $4100 behind since we have spent $14,000 on classes this year.
For the second half of the year, we must up our focus and keep our day to day spending in check. We are ahead of schedule on the 401k contributions, and in fact Mr. Sam's 401k will be maxed out early this year, in September, so we'll have "extra" cash available to put towards our house and trading accounts. Our emergency fund contributions and mortgage principal payments are on track so no adjustment is needed to these two goals. We need to keep adding to our 2012 IRA, we should have $5000 saved to date, so we are $900 behind on that goal.
How are you doing on your 2012 goals?
*We don't normally use credit for day to day expenses, but big expenses will go on our credit card to get the 1% cash back discount. Then we spend the next month trying to pay it off and if we are short by the time the payment is due, we will pull from our savings to pay it off. No sense in getting cash back if you are paying interest.
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