In the Part 1 and Part 2 of this post, I explained why and how I choose to give myself a mental break from the daily Corona virus news, and work towards a better future by focusing on numbers (and refinancing our home). During the refi process, I learned several helpful tidbits, which I am sharing in hopes you will find them useful on your own journey to a brighter financial future.
While I was hunting for an additional loan estimate, I was picking up tidbits from each conversation with a potential lender. I also did some research on escrow. These were my surprising findings:
- You can ask the bank to structure your loan offer with no escrow. That means you would have to pay for taxes and insurance yourself when the time comes – usually twice a year for taxes, and once a year for the homeowners insurance. That also means that you can easily negotiate new, lower insurance rates without having to keep you mortgage company in the loop or asking them to recalculate your escrow. You can chose to pay the premium with your credit card and earn points. Lastly, and the best of all, you can keep the money allocated for taxes in a high yield savings account for most of the year and earn interest while you wait to pay. None of these are possible when your mortgage company keeps your money in escrow.
- You can ask for an appraisal fee waiver (for us, it resulted in fee savings of $700 as well as time savings). You will likely get the waiver if your loan is low risk. This means your credit score is high (760+) and your lender can easily and with high confidence determine that the estimated purchase price/appraised value and the new loan amount are low risk.
I worked with Brian to structure the “no escrow, no appraisal fee” offer and for the exact loan payoff amount (some lenders kept trying to increase our loan amount as a way to earn more interest). This way I could truly see what my cash at closing would be. In the meantime, another lender (Watermark Home Loans) issued their loan estimate, which I shared with Brian. Upon comparing “apples to apples,” this lender had a better offer by $1K. Their lender credit was higher.
Before Brian took the estimate to his management to ask for the pricing exception, he asked if I would be willing to stop shopping and proceed with him, given the favorable outcome. I said yes and stated it in writing. This way he could show my intent to his management. The next morning, Brian came back with the final offer than not only matched but also beat the other competitor by another In my case, it ended up being Brian from the First Internet Bank. He put his best foot forward without hesitation. He gave me an insight into lending process and taught me something new along the way. He took his time to build trust with me and win my business. In turn, I respected his time and effort by locking in the rate and waving off the rest of the competition.
And the result – an entire percent point lower interest rate (3.25%), lowest closing costs than ever before and an annual savings of $4040, which is some sort of multiple of February 20, 2020, the day when all of this started.
PS: Today is March 31, 2020 and we have been officially informed that our mortgage refinancing process has been completed. To date, working with the First Internet Bank was the BEST mortgage-related experience I’ve ever had. From the very first visit to the bank’s website where you can check daily APRs without giving up a boatload of personal information; to the straight up, no gimmicks, super professional interaction with our loan officer (Brian); to the easy to use bank’s online portal that helped us manage all of the necessary paperwork, while keeping us informed every step of the way; to the closing that was done on our premises in less than 30 minutes. In 39 days total from start to finish, I give this refi experience an A+++!