Our house insurance company screwed up our mortgage payment
Ohioguy
rehab loan. It was a 3 bedroom property that sold for about $113k maybe
5 years ago. We got it for $60k at auction, then spent about $25k
fixing it up.
Well, when we first set up the house insurance, the insurance company
evidently didn't listen to me, and set it up incorrectly. Later, I got
a letter stating that since the house was vacant, and had problems that
needed fixed before it was habitable, our insurance was being cancelled.
In the end, we had to be set up temporarily under one of their
subsidiaries that did allow for construction and vacancy on the
property. A few months later, we switched back to the less expensive,
regular insurance. (once repairs were done, and we moved in)
Well, we ended up being double billed, and I had to pay into the
escrow account to make up for it. Now the system at Wells Fargo
evidently sees those old payments to Foremost Insurance, and thinks they
will come up every year. (they won't again)
I'm tired of dealing with Wells Fargo. I don't think my monthly
payment should go up 20% without it kicking off some sort of phone call.
We can afford the $720 a month we were paying until this month, but
not the $866 they want next month. (we are paying about $2,100 in
property taxes annually, and $510 a year for house insurance - those are
part of the monthly payment)
I just set up an auto deposit of $300 a month into our Health Savings
Account. Add in about another $150, and you're talking about an extra
$450 a month we would have to come up with - and I know for a fact we can't.
So, since I'm tired of dealing with Wells Fargo, I started wondering
if the 5.35% interest rate we're paying is still such a great deal for
an FHA Rehab loan. I have a credit score of 720.
If I could possibly shave half a percentage point off, it would
probably save us nearly $400 a year, and that would really add up over a
decade. However, I'm not sure if would be worth the cost - most places
seem to charge about $800 in fees to do something like this.
Thoughts? Anyone out there refinanced recently?
Lou
"Ohioguy" <no...@none.net> wrote in message
news:DGYbo.1737$8A2...@newsfe22.iad...
It's been several years since I refinanced, and I don't know if things like
this are still being offered, but...
What I did was get a home equity loan for the outstanding balance of my old
loan (no additional cash out) and used that to pay off the old mortgage.
For the last several years, my mortgage payment has been to pay off the home
equity loan. Equity loans don't require an escrow account for insurance and
taxes - I still have to have insurance and pay my taxes, of course, and be
able to prove it to the bank. I consider that an advantage, but maybe not
everyone would. The cost of refinancing this way was another big
advantage - the total fees came to something under $80.00 - no points,
closing costs, or fees incurred in a typical refinancing.
The limitation of this method is that it's an equity loan, so you have to
have sufficient equity to borrow against. Since you've only had the place a
year, you may not have sufficient equity. On the other hand, since you sunk
$25K into fixing the place up, and presumably had a down payment, perhaps
you do. It probably wouldn't hurt to check it out.
Bill
Cancel the health savings account for a year.
Vic Smith
>
> If I could possibly shave half a percentage point off, it would
>probably save us nearly $400 a year, and that would really add up over a
>decade. However, I'm not sure if would be worth the cost - most places
>seem to charge about $800 in fees to do something like this.
>
> Thoughts? Anyone out there refinanced recently?
Haven't refinanced recently, but I've seen the average 30 year rate is
down to about 4.5%. Call around to different mortgage brokers and try
to cut a deal with them on fees. That business is not doing good.
They should present more options to you than you can easily find.
And if you don't have the cash for fees, those can sometimes be rolled
into the new loan.
Make sure you look hard at eliminating mortgage insurance if you're
paying that. Your home might now have enough equity to avoid it.
Even if it cost a few hundred for an appraisal, it's a winner.
I can't remember if there's a fee charged by the mortgage holder to
pay the RE taxes and insurance out of escrow, but I eliminated the
escrow as soon I had equity to eliminate mortgage insurance.
Do the math.
By the way, I did a 3-year ARM refi at 3.5% about 8 years ago when the
30-year rate was about 6.5%.
It never exceeded the 30-year average rate on a reset, and only hit it
for one year.
Last year it was 4.0%.
It just reset to 3.62%.
But I had a backup plan if interest rates went up.
So keep your options open when you look at a refi, and know the terms.
It's all pretty simply math.
I think a good honest mortgage broker is a key. Was for me.
Shop them.
I wasted time on the phone dealing with BOA and State Farm a couple
years ago when BOA bought my mortgage.
Tried to charge me a exorbitant mortgage premium.
I pay that to State Farm myself.
And BOA knew that when they bought the mortgage.
It's part of the paperwork.
It was their responsibility to notify State Farm they were the new
mortgage holder and that payment verification should be sent to them.
They didn't do that.
I don't care if it was an honest mistake or not, they still stand to
gain money from that from the unwary.
When I still had escrow, one year the mortgage holder didn't send my
RE taxes to the county and I got a late payment notice from the
Assessor. More time wasted on the phone.
Watch out for incompetence and sharks. Always.
--Vic
Napoleon
<thismaila...@comcast.net> wrote:
>Watch out for incompetence and sharks. Always.
That'd be everyone on the planet. In any financial transaction someone
is trying to get some money out of you (earned or not).
I'd only refi if you can knock a percentage point off your current
interest rate or would be going to a shorter loan, for example from
30yr to 15yr. The point is to run the numbers and if you will be
paying less interest over the life of the loan, including all costs
such as the refi costs, then do it.
But expect the process to take up to one year and pay about $1000.
Here in NY you need a new appraisal, title insurance, title search,
blah, blah blah. When we did our refi, BOA told us we needed an
attorney - I told them to go to hell, and quit making stuff up. They
backed off. So don't let people talk you into unneeded services and
fees - they usually don't know what they're talking about.
Oh, and home insurance is a scam. Every year we have to go to a
different company to get their teaser "first year" rate. The next year
when the rate skyrockets (for no reason) we go to a different company.
What fun!
George
My observation is you will always get the best long term deal from
companies who don't spend a fortune in advertising telling you how good
they are. As you described they are famous for giving a low ball quote
and then trying to make it up and more the next year by declaring some
conditions have changed etc.
One day we were at a show and a a local agent had a table set up. They
were selling Erie insurance. I never heard of Erie so out of curiosity I
asked for a quote. It is sold by agents only. I scanned our homeowners
and auto policies and blacked out the cost and emailed them to him. A
few hours later he emailed back a quote which was lower than what we
were currently paying. I asked the agent about if Erie was like the
others who told you how good they are and then raised the rate big time
after the first year and he said no. He said they don't do much
advertising and are a decent company. It is now three years later and he
was right.
vjp...@at.biostrategist.dot.dot.com
were set up to insure the entire property and not just the house.
Furthermore, given today's steel stud construction, building a new
house can be a lot cheaper than it used to be. If the parts are computer
machined, a new house might even cost less in terms of labor than
fixing an old one.
- = -
Vasos Panagiotopoulos, Columbia'81+, Reagan, Mozart, Pindus, BioStrategist
http://www.panix.com/~vjp2/vasos.htm http://www.facebook.com/vasjpan2
---{Nothing herein constitutes advice. Everything fully disclaimed.}---
[Homeland Security means private firearms not lazy obstructive guards]
[Urb sprawl confounds terror] [Phooey on GUI: Windows for subprime Bimbos]
Ohioguy
> different company to get their teaser "first year" rate. The next year
Well, that's about the only nice thing I can say about Farmer's
Insurance - they only went up $5 the second year.
Cindy Hamilton
> I have repeatedly found insurance policies (starting with my own) that
> were set up to insure the entire property and not just the house.
>
> Furthermore, given today's steel stud construction, building a new
> house can be a lot cheaper than it used to be. If the parts are computer
> machined, a new house might even cost less in terms of labor than
> fixing an old one.
Today's steel stud construction? Most houses built here in Michigan
still seem to be using regular old wooden studs.
Cindy Hamilton