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Re-fi

April 26th, 2012 at 01:38 am

I am finally doing my re-fi. I gave up with the one for USAA that required the Verizon blight gone. I decided to pay off all the credit cards with the savings, and when I did that I found I didn't even need a jumbo loan anymore.
So I found a great loan, ran the numbers, and started the re-fi. Its one of those crazy 5 year loans + 1 balloon payment. The ones everyone is warned about. I'm serious :} I'm going with ING, an internet bank I have several accounts with. Closing costs are ~$4000 total.
But this is how the numbers work out:
The loan is set up for 30 years, biweekly payments. The rate is fixed for 5 years at 2.5% (my mortgage was at 5.37 and home equity at 2.99). In 5 years I can refinance the remaining balance for $1600 total closing costs.
If I pay the amount I am currently paying just for my mortgage I can pay off the new mortgage in 11 years (without a rate change, see below). If I add in what I pay for the home equity, and what i save monthly for my 6 month emergency fund, I can pay off this mortgage in 8 years. I will have to get funds for taxes and insurance ($6000 a year) so money will be a bit tight.
There was also $19,000 that wouldn't go into this loan that needs to be paid off, I got a personal loan at 10.39%. Ouch, but they gave it to me right away. Money was in my account within a day. I have to pay it towards the home equity so ING can close it. The payments are $500/month, but I have a few thousand already for it and figure it will get paid off completely within a few months.
The big scary negatives about this are .... we have to refinance in 5 years. 1) K and I need good credit. K currently has a 760 and I have a 748 (with the verizon blight). I can't see that changing. 2) the interest rates are going to go up. I know they were high in the 70s. But I don't think they are going to jump there in 5 years. The worst is a percent a year, and 7.5% isn't that bad interest to pay. It will only delay repayment a year or so. 3) the house could go down in value and we could only refinance 80% of the value, which means we'll have to have $$. We can always get $$ from loans or credit cards. If I pay it off as planned we will have 65% equity of what the house is currently valued at. It would have to lose a lot of value to go under water. 4) we could lose some income. My planned payment is about 30% of our take home income. So if we lose some income we can still afford the accelerated payments. I may have to give up a few international trips, or actually ask for travel money.
If more than one bad thing happens, it could get tight. Could end up with a big payment that's hard to refinance at high interest. If everything continues to be peachy keen, we can make real headway into paying off this debt. And then I'll use the house for collateral to buy property for the business :}
So, I know its a crazy loan. But I've run the numbers many times and it works out. I think these are all the risks, and I think they are low/bearable.
I am really impressed with the INGdirect re-finance process, BTW. Its all electronic. I can upload the documents, and there are easy checklists to follow. I already have everything signed, they have reviewed/approved most of them (I saw that they needed the second page to one so I uploaded it, got it to them within a day). I'm already in touch with the title company for closing and have sent all the forms and arranged a RemoteClosing, where we have to go to a notary and approve the docs and someone else to sign in person. So we don't have to arrange for a time for someone to come here. I just love living in the future.

Loan application - Denied.

April 7th, 2012 at 07:03 am

I applied for the second time to refinance. It was denied today. They can't do the loan till they see it off my credit, the fax that states it will go off (from Verizon) won't do. I did get a number that my bank uses for the credit report, apparently they might help speed things up with getting the blight removed from my credit.
I am dealing with USAA bank and they are fantastic. The underwriters are in the building so they can put me on hold and get questions answered.

But, in the meantime, I've almost paid off all my credit cards. They will all get paid off within a month. That includes K's cards. I have almost nothing in savings anymore though. But it will build up again.


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.

Jan 13 update

January 13th, 2012 at 05:34 pm

I was inspired again last night, and spent several hours organizing...

I finished the business books. Just wrote about the business in a comment - http://purple.savingadvice.com/2012/01/12/jan-12-update_90101/#comment-197691

I thought I had already finished the books, but I had one last statement to resolve. The merchant/credit card, so it took a bit of time. I bought a lot of inventory this year so I think I officially lost money, my quicken summary shows only $2000 or so profit and I still have to deduct rent. I'm hoping not to make money, I would like to not have a big tax bill this year. Last year was over $10,000 combined. :{

I organized all my personal files, I moved the ones I don't use regularly and have a really nice empty drawer for this year's financial things. I went through and organized all my personal tax items, and everything else is at least in the proper file folder.

I started entering charities into an excel file and got all the info from the receipts I have and and my checkbook registry. Still have to do the credit cards.

I also entered the charity receipts from the Veterans Association. I bring them 'snacks' on a regular basis. I bring them cup of noodles soups they can just heat up for a meal. I go to the VA regularly and was bringing them magazines, and a few years ago they asked if I could possibly bring food. Apparently when some of the vets have long appointment days and no money they sometimes steal food, and end up in jail. So if the volunteer office can give out food it doesn't happen. So I have been the snack lady for the last few years (4 or 5?). I buy 'flats' of the soup (16 or so?) for about $4 at the store I get my paper towels, toilet paper, etc. I go once a month (or K does, and he's trained to get the vet snacks) and buy a few flats. Costs me about $20-25 a month, 5 minutes of my time, and has an incredible ROI. There hasn't been one jailing for food theft (that's saved me in tax dollars!) and there's been a lot of vets fed.

Jan 11 update

January 12th, 2012 at 01:44 am

Had my new consolidated deposits go through today. $2575 in total. It dropped my bank balance to $650 which was a bit unnerving, I like it over $1000. I didn't get a $1741.15 paycheck automatically deposited, I need to look into that, not sure I turned in the timesheet or if it was just late due to the holidays.

I transferred that exact amount from my 6-month living expense/saving, I will transfer it back when I get the money. So my checking account is accurate - $2675 with about $1200 that hasn't cleared. I'm caught up on bills, and according to my http://purple.savingadvice.com/2011/12/28/time-line_89165/ timeline I have more income coming in before I pay my credit card (have $1000 budgeted, but it will be more this month thanks to Vegas. http://purple.savingadvice.com/2012/01/11/vegas-and-vistors_...

I need to start focusing on taxes. I see my accountant on Feb 4. I have to finish my books for my hobby business, pay sales tax and issue W-1099s by the end of the month. And start on my personal stuff which will be complacdo this year.


TO DO - enquirer about paycheck
TO DO -move 6-month savings into at least CDS. Balance is currently over $16,000.
TO DO - change timeline figure so the dates are accurate.
TO DO - TAXES!!!!!!


Time Line

December 29th, 2011 at 07:12 am

I made a time line and figured out when I should pay what. I am going to change my automatic savings to be monthly and occur with a pay period.

This has all of my regular expenses. I have $1000/month for my credit card which is an over estimate, I only charged $700 the last few months. And often charges have funds designated in a savings account.

The only other bill on here is K credit card, but according to this I will have about $3000/month (plus any extra income) to put towards the balance. Minus any other bills or things that come up. We'll see how this prediction holds out...

Now to go change the automatic withdrawals...


(updated - pay dates switched)

Income

December 28th, 2011 at 05:51 pm

A big part of the financial picture is income. My father used to say 'its better to make your income bigger than your budget than to try to make your budget match your income'. I got a lot of great financial advice from my dad.

Tracking my income is a bit tricky. I have several sources. I think for now I will just focus on income from salary. And just on 'take home', which isn't even 'net' because retirement has been taken out. But its what actually gets deposited into the bank account for me to use.

There are 3 sources (2 of mine, 1 of K) and they all get paid differently.

Me
$1,468 - every 2 weeks - $38,183/year, $3,182/month
$1,741 - twice a month - $41,788/year, $3,482/month
$1,000/month (consulting, not guaranteed past spring 2012)

K
$2102 - twice a month - $50,461/year, $4205/month

Total (not including consulting)
$10,870 per month, $130,432 /year

Timing for mortgage payments has been an issues (partly because I never wrote it out like this and thought about it, this blog has been helpful). Mortgage is $2600/month (includes $600 in taxes) and none of the income is enough to cover the entire payment. So I have a savings account that I use. I need to re evaluate how to use it, I should be deducting the full mortgage from paychecks I don't need for other bills. (first i need to study the other bills timing..) And I should study when the automatic savings gets taken out, they should correspond to income (some were set up with other income structures or just willy nilly - $25/week sort of thing).

... I started a to do page so I can keep track of all the things I think about when I blog. When I started this I was wondering what I would do once I wrote all my initial posts, and so far each post seems to end with things I need to do. Little bit each day. I have the rest of my life to work on it.

Current Saving

December 25th, 2011 at 01:10 am

I am really into automatic savings. I have a lot of bank accounts. When I know I am going to do something (like travel somewhere) I figure out how much it will cost, then start an automatic with drawl into an account. It really helps me because I travel a lot. I also save for people to come visit me. I save $25/week so my high school friend can come visit one a year!

My current automatic savings:

1) $16,000 - Misc fund - this is my emergency fund. Automatic savings is $14,000/year ($1200/month)

2) $1000 - House fund - mostly designated for new fence and tree trimming. No automatic savings (need). Constant need for house repair.

3) $1000 - Taxes - Not enough. No automatic savings.

4)$3600 - Cats - for vet bills. Automatic savings $200 every 2 weeks. Not sure how much to save, have 3 12 year old cats. Vet bills typically $2500/year.

5)$55 - Me savings. For things I want. Automatic $33 every 2 weeks. Balance recently went to pay K credit card.

6) $5 - K savings. After his cc paid. No automatic savings

7) $2200 - Mortgage and bills. To cover times when payroll doesn't match up with bill paying. automatic savings $400 month.

8) $200 - Cars. To pay for car repairs and eventually new cars. Automatic savings $400/month. Balance recently went to pay K credit card.

TRAVEL - will end when trip taken
9) $400 - $100/week VEGAS 1/12
10) $700 -$400/month London 10/12

VISITS
11) $800 -$200/month - Nieces 1/12 - air already paid
12) $950 -$25/week - J soon