We closed on a refinance of our existing home loan this past Friday. Basically what we are doing is the following:
We currently owe 88000 at 5.25 % for about 7 more years on our house, P+I = 1502 and change.
We currently owe 51000 at 7.75% for 11 more years for the land we bought at Oakwood shores. P+I = 590 and change.
We applied for a 144,000 at 3.75% for 10 years refinance of our home mortgage. P+I will be 1440 and change. We will receive about 51000 cash out, and use the proceeds to pay off the land loan. Our monthly payments will drop by almost 700 a month. Over the life of the loan we save a lot of interest (since both rates were a good bit higher).
Closing costs ended up being about 3700 (1% origination plus the real fees). This works out to 2.57% of the loan principle, which is pretty bad but could have been worse. We learned from the loan officer that Texas caps closing costs at 3% of principle, so we were pretty close. When we applied our "good friends" at the TDECU estimated our closing costs around 4200 (or 2.9%) but told us (Like it was a good thing) that the government caps them at 3%. Really pissed me off that this super friendly, hometown super sweet special deal banking institution (which it really was until the last few years) feels proud to gouge its customers RIGHT UP TO THE MANDATED STATE LIMIT. Argh. Well it wasn't quite as bad as all that, my ire reduced some when reviewing the HUD-1 closing statement against the GFE (side note: the first HUD1 they sent had an error, our cash out was 2000 less than expected. The TDECU and Stewart title had to do some fancy dancing to get that right on the night before the closing. Anyway...), some of the charges actually went down (they seemed to charge us actuals for things like the appraisal). So maybe they aren't so bad. Still, telling me it wouldnt get any worse because of the state cap didn't endear me to the TDECU any more.
On a positive note, during the process we were pleased to learn our house appraised for 265000. We had gotten the tax value down to around 241000 starting for the 2009 tax year. Given what's been going on in the housing market for the last 2 years, we were afraid it would have dropped to 210 or 220.
Talking to the lady at Stewart title (and griping about paying title insurance for the THIRD TIME on the same piece of property which was originally purchased from the builder. Still pissed. Like there's any damn risk to anybody from a title clarity standpoint. But I digress...) she told us about a requirement of the texas blah blah blah (regulatory agency which governs title insurance) that if we close a loan on our new land within 4 years of purchase, we get a 1500 rebate on the title policy, independent of which title company we use. We've been talking about building out there in the next year or two, and this puts somewhat of a carrot to do it within 4 years. Of course we bought the land over a year ago (July 2009) so only have a little less than 3 years to go. But that is within our planning window.
The loan should fund by next wednesday at which point I'll go pay off the land.
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