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Archive for March, 2012

Ramblings March 24

March 25th, 2012 at 12:52 am

What a week.
Signed all the documents for the refinance last weekend but had some issues with some of the numbers so decided to call the bank rather then send them in. I was concerned because it was listed like I had all the assets (and k had only a few), etc. The bank said not a problem they just put down minimums. The guy started looking to see if there were any other issues... after about an hour on the phone, he took it over to the underwriter.... ... Came back DENIED. I have a big ding on my credit, something went to collection.

[backstory - in 2007 I switched my phone from verizon to AT&T. Verizon charged me $300 for breaking the contract. I hadn't had a contract with them for years, they tried to say that when they sent me info and I didn't do anything that was a contract. So I called the Government commission listed on the phone bill, and they looked into it. Ruling was in my favor.]

So the loan was stopped. There are other loans that allow that ding, but they didn't have good cash out or APR and some wanted me to come up with $40,000. [one good point, was on the phone for 2 hours and the bank guy said I was the most calm, composed person he ever had to deal with, even after this unexpected screw up].

So then I called the government commission and found out their databanks don't go back that far.

So then I called Verizon. Got transferred a few times, hung up on a few times, and finally got through to someone who knew what I wanted and looked me up and said the credit was off the books and he would forward that to the reporting company and fax me a letter within 24 hours. YAH!

I got the fax the next day. It said the bill was paid off. I called my bank, and read them the fax, and they said it wouldn't work. The ding has to be totally removed from my credit. I asked them specifically what the magic buzz words to use were. They said it can't say collections, and it can't indicate I was ever late.

So I called back Verizon. Got transferred and hung up on a few times. But I'm persistent. Got through to the right place. Told them the buzz words. They said they could do it. They are sending the credit people another update, and faxed me a paper that said the ding will be totally removed from my credit.

I will call my bank at the end of the week and ask them to do a hard pull on my credit (I asked what the magic buzz words are) to see if its gone. And then restart the loan procedure. They can use most of the signed disclosures, so it won't be so bad.

I am planning on sending Verizon an invoice billing them for at least 4 hours of my time (more if its not done yet). Apparently this works sometimes.

The bank figures the ding was only noticed so late in the procedure because my score was so high, they just assumed I couldn't have anything big on it. Who knew.

So I transferred k's 401 from his old company (invested in a hodge podge, he tends to just equally choose funds) into an IRA brokerage account. He wants me to invest. Its a bit scarier playing with someone else's money. I'm going to probably go with low cost index funds and a few choice stocks. I don't think we will be adding to this fund. He has a retirement fund with his work (which I think discredits you?). I am trying to put money in roths for both of us, but maxing it out is $833 a month to save, and right now that's not happening.

The refinance was going to include paying off $16,000 I have in 'business' debt. Since I am sole owner the debt is mine. I consider it 'business' because it was used to buy inventory, and I was hoping the business would make enough to pay it off. But I am trying to grow the business, its currently in my house and I would eventually like to move it out. My dream is that k and I will buy the property and the business will incorporate and rent it from us.

The business is internet based, we sell custom clothing. There are currently over 10 people who help with production and shipping. The sewers are mostly stay-home-moms. It started off as a make-income for my friends with babies and I've had friends running it. I took over a few years ago and changed the business model a bit and did massive organization, before it was limping along making enough money to pay everyone and pay me enough for the bother of it in my house and the work I did on the occassional weekend. But I decided to build it up to move it out to a retail store which would significantly increase business. The plan is to move it out when I know I can afford all the expenses from the current business. And I want to have most of the stock. I don't want to grow in debt.

But I am in debt now, I used the card to make some major stock purchases last year, and to cover cash flow. Its only been 5 months since we re-organized and I am now taking an active role and making sure everything is progressing. I am not involved in daily production or shipping. I am doing the finances, logistics, and web work. I'm also making sure the house (my house) has room to expand. And, like all owners of small businesses, I take out the garbage. I am the direction. I have great people doing the work. I think its going to grow well. Its already shown it can limp along without even good pictures of our products.

And my point was... The $16,000 credit card debt for the 'business'. I'm going to pay it off with my 6- month emergency fund. It will wipe it out. I have been putting $1200 a month towards it, so it will grow again. I have psychological issues with putting my money towards the business debt, but I really need to get over them since its all me. (sole owner) Yes, I can write off credit card interest as a business expense. But its an unnecessary expense. And its better the business invest in itself and not have debt. So as the credit cards come in, I will pay them off.

I would still like to take the cash from the refi to pay off k's card. its at $12,000.

Refinance

March 13th, 2012 at 03:46 am

I spoke with my bank and they offered me a great refinance.I'm getting more than I want, besides the first and second I'm going to get enough to pay off the credit cards, and the payments will be less than the one payment for my current mortgage.

However - it has to be a 'jumbo' and I'll be on a direct government loan (so they back it but my bank still administers it)and its not fixed. I never thought I would consider a not fixed loan - but this one is 3.125% for at least 5 years. In 5 years it will get adjusted, but not go up more than 2%. IT will keep getting adjusted every 5 years, but NEVER go more than 5% over initial (8.125%). And it will take at least 20 years to get that high, and that's only if interest rates rise.

I should have at least an extra mortgage payment a month if I consolidate and have no other debts (and we both keep our jobs). I ran the numbers and that would allow me to pay off the mortgage in about 10 years. I'll be 10 years from retirement.

Since k and I aren't married we have to both be on the line to initiate the loan, so we're going to do it at 7am tomorrow before he goes to work. We're talking a May closing and first payment July. Its a full doc loan.

Sure will be a lot simpler to consolidate all of this.

Transfers and thinkings

March 11th, 2012 at 06:07 pm

My monthly transfers to savings went through. It really has been helping me to have them all go at once, and knowing what paycheck is used to pay what. I refer to my chart a lot.

This month I did what I did last month, which was to transfer a few of the deposits to k's credit card. I took it out of my savings, house savings, car savings, bill savings (to get a head of mortgage when k wasn't working) and taxes. I know I need to save for these things, but I think paying the credit card is better at this point. Together its another $1000 or so to the card. I am not touching my emergency savings (now at $18,000!, the cat savings (for vets) now at $4500, or any of my trip funds (saving for England and Italy and friends come visit). k's credit card balance should drop to $11,500. And he has been ok with not charging too much.

I have been seriously thinking about the refinance. I've run a few numbers, and even signed up with lending tree. Just checked the email, they are "confident that we can find a loan option that fits your financing needs." My current mortgage is $317,000 at 5.375 (8 years in). I also have a home equity loan at $131,500, variable but currently at 2.99%. (this was run up by a lot of things that were beyond my control and really bothers me, perhaps some day i'll figure out how to blog about it nicely. but for now, lets just call it debt and accept it.)

Total is about $450,000. I think I should combine them (I think I might even have to.). The house is valued by Zillow over $600,000 so we have at least 20% down. I know I have 'excellent' credit (750 I think, was checked within a few months) and I assume k does also. I'm sure we make enough with income we can document to satisfy the mortgage, our combined take home is about $8000, and that's after retirement withdrawals.
I currently pay about $2000 for my mortgage payment (not counting taxes) and $340 for the loan which is just covering interest. I was going to start working on it after k's credit card. But its such a huge debt I think it would be better handled with the mortgage. Interest rates are going up.
So I have been running numbers. And I signed up with lending tree to see what they could do. (Anyone have experience with them?).
I got an offer for 3.75% for 30 year fixed. That would give me a payment of $1922. If the rate is 4%, its $2148. These numbers aren't that different to me, and both are in the range of my current mortgage payment (without the home equity loan). So I could combine my loans and pay about what I am paying now. If I took the monies I am currently paying the loan ($340/month) and my emergency savings ($1400/month) I have almost a mortgage payment, so if I add that to the mortgage as additional each month (and a bit more) I can pay off the entire thing in about 10 years.
So it looks like the thing to do is combine the loan and look for a fixed rate 30%, and even 4% is ok.
HomePlus Mortgage offered 3.75% and no points. Anyone know anything about this?
My current loan is with GMAC through USAA. I tried running the numbers through both their online refinance calculators but got loans that required $45,000 or so down. I am planning on calling them on Monday to see what they can offer me, telling them about the 3.75% fixed with no points for the full amount I've already been offered. Then I will call HomePlus and see what they can really offer :}
What I want is - the entire amount refinanced. No points. Low closing costs. I'll accept a higher APR for these.
I would like to refinance with the bank I already have. But I need to think about how to evaluate/choose another bank. How much does it matter who I pay a check to?
Should I be doing anything to prepare for the refinance? Should I pay off the credit card? Does $11,000 in debt mean anything when you're borrowing half a million? I have quite a few credit cards with no balances. I don't know what my total line of credit is (but, now that I think of it, that's probably something I should be figuring out and blogging about since its 'financial'). I do recall that I had to close a few cards when I first bought the house, but that was when credit was still crazy and they kept increasing my limits every year (and I was getting bombarded with credit card checks). I do recall my credit card limit then was some ridiculous amount like $150,000. My mortgage person joked that I could almost have bought the house on my cards. I am sure my limit isn't that high, but I can think of several cards that have a $20,000 or more limit, so perhaps I should figure that out and close/limit some accounts. TODO - organize credit cards & figure out limits and close accounts if not needed. Or max them all out and run off to an island. Should always keep that option open.