Refinance Journey - maybe not YMAM frame of mind

[justme]

So some of my trials and tribulations over the years have been posted on the board so I figured I'd add the current one. 

So bought my condo in 2015. $154.9 @ 4.5%

Then I had to take a cash out refi in 2020 because I got sacked with a 30k assessment because we had to put a brand new exterior on the whole building and new windows. Ended up at 158 @ 4.25% (I only took around 18k out and paid the rest from savings.)

Then early in 2021 I tried to refinance on lower rates - they would. It got it into the 3's but after paying $500 for the appraisal and the appraiser decided that my condo somehow lost $30k in value from Feb 2020 to April 2021. No fucking idea how since the exact until in my building had sold two weeks before for $10k more than what mine was appraised at in 2020. His horrible number triggered PMI and while they tried I just couldn't figure out why I'd refi back up to 158 or so to save all of $10/month. All told it was costing me $6k with no real savings and I was like that $6k could be brand new floors. So I abandoned ship and just fumed and what I could have spent the $500 on.

Then in December I was on a family trip and my bro convinced me to talk to his broker. He had just done a cash out refi on his house to do his kitchen/baths only just a year after he did a refi to get a lower rate because he bought an FHA loan so he was paying PMI for life. 

I ended up gobsmacked. Somehow this guy was able to get the appraisal waived AND they waived any info from my HOA that would have cost money. I'm back to $158k but at a 2.99% rate. I'm saving $111 a month in my mortgage payment and like a good YM'er that's going to savings. Though it is adding around $5k back into what I owe. 

I debated it back and forth for a while whether I wanted to do it. But I decided to go with it because if I DO sell in in a few years the few thousand my loan went up won't be much - especially compared to my increase in savings.  If I don't sell it I'll have more of a cushion/profit to rent it AND I'll save something like $40k in interest with a rate 1.26% lower.

And (getting to the maybe not so YMAM) when I thought about it I realized that if I was renting the last few years I would have likely been paying a bit more per month on rent and would essentially be like the last few years didn't happen either. I wouldn't be complaining about it if it was rent - and my mortgage resetting to the amount it was 2 years ago is essentially like I was paying rent vs my mortgage/getting equity. 

So I'm opening myself up for the shame bell for refinancing when it's more than 2 or 3 years to payback the closing costs. 

But I highly suggest making sure to check out mortgage brokers. I got one of those cold mail flyers in the mail from the same company I ended up refinancing with and the rate I got was at least .25% less than the flyer. The guy was talking about how they give them better rates for whatever reason. 

And uh I'm not sure exactly how they're deciding to waive appraisals or not - I know my credit score had something to do with it - but they didn't bat an eye at okaying a price that was $13k more than it was appraised at my cash out refinance and was $43k more than the asshole appraiser I got. And my bro got the appraisal waived for both of his refinances. So uh take that how you will with regards to the housing market. 

[raeoflyte]

Essentially every appraisal done since 2012 or so has been logged with Fannie and freddie. So big data on all appraisals with every lender and your specific loan details determine if an appraisal can be waived. It's a pretty good thing since it's very difficult to become an appraiser these days and demand for refis and purchases are at all time highs the last couple years.

[justme]

Jan 10, 2022 23:18:45 GMT -5 raeoflyte said:

Essentially every appraisal done since 2012 or so has been logged with Fannie and freddie. So big data on all appraisals with every lender and your specific loan details determine if an appraisal can be waived. It's a pretty good thing since it's very difficult to become an appraiser these days and demand for refis and purchases are at all time highs the last couple years.

So does that mean because I aborted the refi with the shitty appraisal it was never entered?

The current guy mentioned it was $725 and could take weeks if it wasn't approved. Kinda made me wonder if I should start a side gig lol.

I figured since the other one was making me get one 13 months after my last one that I had no shot in hell of getting it waived since the first one I tried mentioned nothing about it. Unless loan depot just doesn't do that. Because if I went through with the refi they would have given me the appraisal money back (a guarantee they have) - one would think they'd have incentive to go the waived route!

[CCL]

I refinanced my house in December 2020 with my credit union. My guy waived the appraisal, too. I kept the same loan amount, lowered my rate from 3.5% to 2.625%, only added 1 year to the term since I had refinanced a year before from 4.125% to 3.5%. Lowered my payment about a $100. Ended up skipping a payment and walked away with an extra $800 in my pocket.

[buystoys]

We refinanced with Quicken Loans last summer.  Our appraisal was also waived.  Maybe that was because we weren't looking to take any money out, just refinance our current mortgage.  We went from a 30 year to a 15 year with about the same mortgage payment.

[wvugurl26]

DH refinanced with Rocket last fall. Since he didn't take money out and the neighbors were selling like crazy, no appraisal was needed. He also went down to a 15 year and sub 3% interest.

[raeoflyte]

Jan 11, 2022 0:14:43 GMT -5 justme said:

Jan 10, 2022 23:18:45 GMT -5 raeoflyte said:

Essentially every appraisal done since 2012 or so has been logged with Fannie and freddie. So big data on all appraisals with every lender and your specific loan details determine if an appraisal can be waived. It's a pretty good thing since it's very difficult to become an appraiser these days and demand for refis and purchases are at all time highs the last couple years.

So does that mean because I aborted the refi with the shitty appraisal it was never entered?

The current guy mentioned it was $725 and could take weeks if it wasn't approved. Kinda made me wonder if I should start a side gig lol.

I figured since the other one was making me get one 13 months after my last one that I had no shot in hell of getting it waived since the first one I tried mentioned nothing about it. Unless loan depot just doesn't do that. Because if I went through with the refi they would have given me the appraisal money back (a guarantee they have) - one would think they'd have incentive to go the waived route!

At my company everything is uploaded automatically as soon as we receive the appraisal. I expect most lenders are the same.

Waiving the appraisal isn't really up to the lender. If it were, theyd all be waived. Fannie and Freddie's automated underwriting systems determine if the appraisal is waived. There are loan parameters that can help get a waiver, but some properties won't ever get a waived.

[minnesotapaintlady]

My appraisal was waived in 2020 because it was a no-brainer that I had way more than 20% equity. I was only asking for about 1/3 of the taxable value.

[nidena]

I don't remember paying for an appraisal when I refi'd last spring but I think that was because it was only six months after the purchase in summer 2020 and I know an appraisal was done at the time of actual purchase.  It might have also been a VA loan thing, too.

I feel like any house that appraises for less than it did in 2020 or 2021 needs a new appraiser.  I mean, even shacks are appraising high because of the land they're on.

[Tiny]

Justme - that low ball appraisal might help you out with your property taxes, depending on how they are calculated and if you can put in an appeal. That low ball appraisal might save you some $$ going forward (for a few years) and you might be able to get a refund going back a few years. If you are looking for a side gig - going thru the effort and jumping thru all the hoops of "lowering your property tax" could be worth the effort (as you can use the knowledge and skills learned going forward). Property taxes never go away and are guaranteed to rise.        Even if your property taxes are low -  saving  $100 a year - adds up over time.  


ADDED:    my mortgages are too small and lenders don't want to give me  any breaks on a refi.   So, I'm just pre-paying a little bit more (which is easy to do when the mortgage payment is small to begin with).   The rates on my mortgages aren't that bad.    I'm OK with this.   I was able to take advantage of the low house prices before the start of the run up in 2019 - so missing out on the low interest rates isn't that painful.    sometimes you're the bug, sometimes you're the windshield.   

[Bonny]

Jan 11, 2022 10:11:41 GMT -5 Tiny said:

Justme - that low ball appraisal might help you out with your property taxes, depending on how they are calculated and if you can put in an appeal. That low ball appraisal might save you some $$ going forward (for a few years) and you might be able to get a refund going back a few years. If you are looking for a side gig - going thru the effort and jumping thru all the hoops of "lowering your property tax" could be worth the effort (as you can use the knowledge and skills learned going forward). Property taxes never go away and are guaranteed to rise.        Even if your property taxes are low -  saving  $100 a year - adds up over time.  


ADDED:    my mortgages are too small and lenders don't want to give me  any breaks on a refi.   So, I'm just pre-paying a little bit more (which is easy to do when the mortgage payment is small to begin with).   The rates on my mortgages aren't that bad.    I'm OK with this.   I was able to take advantage of the low house prices before the start of the run up in 2019 - so missing out on the low interest rates isn't that painful.    sometimes you're the bug, sometimes you're the windshield.   

Yeah, I looked into refying the AZ house which has about a $210k balance but no one was interested in a non O-O loan less than $300k. Currently it is a second home. LTV is no more than 20% and FICO is between 810-815. In addition I think we might have had to do a structured loan. 3.75 isn't a great rate and we could just pay it off but frankly I think we did really well by keeping that loan and our money invested in the market.

First world problems! 

[Tiny]

Jan 11, 2022 10:57:49 GMT -5 Bonny said:

Jan 11, 2022 10:11:41 GMT -5 Tiny said:

Justme - that low ball appraisal might help you out with your property taxes, depending on how they are calculated and if you can put in an appeal. That low ball appraisal might save you some $$ going forward (for a few years) and you might be able to get a refund going back a few years. If you are looking for a side gig - going thru the effort and jumping thru all the hoops of "lowering your property tax" could be worth the effort (as you can use the knowledge and skills learned going forward). Property taxes never go away and are guaranteed to rise.        Even if your property taxes are low -  saving  $100 a year - adds up over time.  


ADDED:    my mortgages are too small and lenders don't want to give me  any breaks on a refi.   So, I'm just pre-paying a little bit more (which is easy to do when the mortgage payment is small to begin with).   The rates on my mortgages aren't that bad.    I'm OK with this.   I was able to take advantage of the low house prices before the start of the run up in 2019 - so missing out on the low interest rates isn't that painful.    sometimes you're the bug, sometimes you're the windshield.   

Yeah, I looked into refying the AZ house which has about a $210k balance but no one was interested in a non O-O loan less than $300k. Currently it is a second home. LTV is no more than 20% and FICO is between 810-815. In addition I think we might have had to do a structured loan. 3.75 isn't a great rate and we could just pay it off but frankly I think we did really well by keeping that loan and our money invested in the market.

First world problems! 

Yeah, I have a second home loan - original amount 156K 30y 3.56%. Not great but also not that bad for what it is. I did look to refi (without taking out equity) and the offers were fairly absurd (closing costs and interest rates). My only consolation is that I bought before the crazy run up in sale prices. It also got a lot of family and friend use due to the pandemic - so a bright spot of "happy memories" for a lot of people I love.

My primary house mortgage balance is currently 40K (at 4.15% - was originally an 80K loan 10 years ago) I thought I'd have this paid off by now - but I keep finding better "pre tax" places for my "extra money" (about 5 years ago I was able to do a HDHP with an HSA so it seemed like a better plan to put extra money there (so it could grow tax free long term) than to pay down the 4.15% mortgage loan faster... and then the contribution limits went up due to being over 50 on tax advantaged accounts - and I wanted to keep up maxing the accounts. ::sigh:: It sure felt like NOT paying payroll taxes on about 10K per year was better than paying the payroll taxes and then paying down the 4.15% mortgage a little faster each year.  I'm math challenged so I may have made a mistake. ). 


So, to bring this back to the OP - I don't think there's much shame to throw on having done the refi (even with the 2 to 3 year break even point). Mortgage debt tends to be a "long game" and my rule of thumb is as long as you aren't financing your "lifestyle" with the refi... it's most likely NOT a bad thing in for the Big Financial Picture.

[justme]

Jan 11, 2022 10:11:41 GMT -5 Tiny said:

Justme - that low ball appraisal might help you out with your property taxes, depending on how they are calculated and if you can put in an appeal. That low ball appraisal might save you some $$ going forward (for a few years) and you might be able to get a refund going back a few years. If you are looking for a side gig - going thru the effort and jumping thru all the hoops of "lowering your property tax" could be worth the effort (as you can use the knowledge and skills learned going forward). Property taxes never go away and are guaranteed to rise.        Even if your property taxes are low -  saving  $100 a year - adds up over time.  


ADDED:    my mortgages are too small and lenders don't want to give me  any breaks on a refi.   So, I'm just pre-paying a little bit more (which is easy to do when the mortgage payment is small to begin with).   The rates on my mortgages aren't that bad.    I'm OK with this.   I was able to take advantage of the low house prices before the start of the run up in 2019 - so missing out on the low interest rates isn't that painful.    sometimes you're the bug, sometimes you're the windshield.   

I know property values for taxes use crazy math, but the lowball appraisal is around $60k higher than what the taxes are saying is the value of my condo. I'm assuming it would only help if it was much closer to what the county is saying my place is worth?

[chiver78]

Then I had to take a cash out refi in 2020 because I got sacked with a 30k assessment because we had to put a brand new exterior on the whole building and new windows. Ended up at 158 @ 4.25% (I only took around 18k out and paid the rest from savings.)

youch! I'm curious about the state of your HOA that your assessment was that crazy.    my old townhouse, we re-sided the entire complex of 76 units without any special assessment. we split the cost between what was in the very healthy reserves and taking out a loan for the other half. I think the payoff term for the loan was 5y. 

as far as the refi journey in general, it's a tool to use to your benefit. I wouldn't sweat walking away from it after the shitty appraisal. yeah, the $500 could have been put to a better (more fun?) use, but it is what it is. my friend M just refi'd to use the equity created by the market going bonkers in order to lose PMI. I didn't need to refi (per the rules set by my lender) to do the same since I had a few significant capital investments into improving my property. 

good luck with whatever you decide to do. 

[Tiny]

Jan 11, 2022 12:35:46 GMT -5 justme said:

Jan 11, 2022 10:11:41 GMT -5 Tiny said:

Justme - that low ball appraisal might help you out with your property taxes, depending on how they are calculated and if you can put in an appeal. That low ball appraisal might save you some $$ going forward (for a few years) and you might be able to get a refund going back a few years. If you are looking for a side gig - going thru the effort and jumping thru all the hoops of "lowering your property tax" could be worth the effort (as you can use the knowledge and skills learned going forward). Property taxes never go away and are guaranteed to rise.        Even if your property taxes are low -  saving  $100 a year - adds up over time.  


ADDED:    my mortgages are too small and lenders don't want to give me  any breaks on a refi.   So, I'm just pre-paying a little bit more (which is easy to do when the mortgage payment is small to begin with).   The rates on my mortgages aren't that bad.    I'm OK with this.   I was able to take advantage of the low house prices before the start of the run up in 2019 - so missing out on the low interest rates isn't that painful.    sometimes you're the bug, sometimes you're the windshield.   

I know property values for taxes use crazy math, but the lowball appraisal is around $60k higher than what the taxes are saying is the value of my condo. I'm assuming it would only help if it was much closer to what the county is saying my place is worth?

You are right you want the County to use a lower number/value. BUT, as you noted, it's not really "crazy math" so much as it's a "Crazy Formula" to calculate your taxes owed.

You may need to figure out HOW the "value" of your condo was calculated/derived for the tax formula. The County probably used some sort of a formula to do it. Odds are you will have some way to manipulate a piece (or more) of that formula that generates your property's value. You need to figure out how the County is valuing your property.    You need to know if the low ball appraisal  is lower than the "value" the County started with to get to the amount they say your property is worth.     

Caveat -  property taxes are truly on a County by County basis  so there aren't any 'rules of thumb' or sort of accurate assumptions to be made.  You need to know what goes into the calculation of your prop taxes.    It's worth the effort.    If the lowball appraisal  doesn't effect your taxes (as in won't help lower them) - then atleast you KNOW how your property is valued (and maybe you will find that it's somehow based on your purchase price all those years ago... which may be a "happy" thing - because new buyers will be paying more in property tax than you do for their unit  that's comparable to yours.  Win!   You will  still be required to complain about how horribly high property taxes are in public conversations... gotta blend in...       )    This caveat is also why you can't really compare property taxes in one Area/County to another Area/County based on the $$ amount paid only.  You need to know what the taxes are paying for and how they are calculated.      Knowing more about your property taxes may ruin your participation in future conversations about "how horrible" property taxes  OR how "great the low property taxes"  are.... 

In theory, the information on where numbers come from (or how they are calculated) should be available at the County Assessor website (or even possibly included with your Tax Bill).

It annoys me to no end - when my 2b/1b house gets "valued" by the County the same as the flipped 2b/1b house across the alley. That house sold at $425K to the new owners (after the flip - bought for $168K). My house will be bought by a flipper for way way way less than $425K (I have a 75 year old kitchen and bathroom - and a barely lit unfinished "old house" basement) .... yet if I don't keep after my taxes - I pay property tax on a more "valuable" property.

[justme]

Jan 11, 2022 13:18:06 GMT -5 chiver78 said:

Then I had to take a cash out refi in 2020 because I got sacked with a 30k assessment because we had to put a brand new exterior on the whole building and new windows. Ended up at 158 @ 4.25% (I only took around 18k out and paid the rest from savings.)

youch! I'm curious about the state of your HOA that your assessment was that crazy.    my old townhouse, we re-sided the entire complex of 76 units without any special assessment. we split the cost between what was in the very healthy reserves and taking out a loan for the other half. I think the payoff term for the loan was 5y. 

as far as the refi journey in general, it's a tool to use to your benefit. I wouldn't sweat walking away from it after the shitty appraisal. yeah, the $500 could have been put to a better (more fun?) use, but it is what it is. my friend M just refi'd to use the equity created by the market going bonkers in order to lose PMI. I didn't need to refi (per the rules set by my lender) to do the same since I had a few significant capital investments into improving my property. 

good luck with whatever you decide to do. 

My building is 6 stories with 300 units. It was an 8M job. So the building was built in 2002 as apartments and then realized they could make money in 2004 by converting to condos. Apparently the construction company made some mistakes and the HOA did have a settlement with the company but it was a very small amount. This was before my time and from what I heard it was basically a take what you can get as the company went bankrupt not that long after. But at the time they didn't know how bad it was. They knew there were some exterior water issues but they thought it was isolated to certain locations. In the process of getting some bids and having them look at the damage and take away some of the stucco to look it became clear just how much they fucked up. There were whole portions where they just skipped entire steps. This wasn't a residing - this was a strip the entire outside of the building to the studs and then rebuild it out with the correct stuff and put in brand new windows to make sure it was a water tight. I unfortunately was in one of the first groups and had scaffolding outside my unit from April to October. Towards the end it was still a 6-8 week job for each section they did. 

The HOA is otherwise ok. They just relied on people in the past saying the few water issues they saw weren't a whole building problem. It's professionally managed and they do have the regular reviews of our reserves to make sure it's enough. If I'm remembering right it's around $2M in reserves. Which just wouldn't fit this job. They debated using some of the reserves to pay for it, but decided against it because then you'd have an assessment payment AND higher HOA fees to beef back up the reserves. They opted to keep HOA fees the same and just lump it all in the assessment. If I'm remembering right most of the people opted for the payment plan. I said fuck that (in part because the way the loan was set up there's no savings for early payment) and took the discount to pay up front.

On the upside thanks to covid what was supposed to take over 2 years was done in 1 because other places canceled jobs which freed up crews to go whole hog on our place.

And additionally around this time we found out that our insurance company fucked up an assessment for hurricane damage and missed damage on our roof - so they had to pay to completely replace the roof for us. So we're sitting with a lot of brand new stuff. 

[chiver78]

yikes, that post is making me twitch. I'm glad it seems to be all worked out now. 

[justme]

Jan 11, 2022 16:54:55 GMT -5 chiver78 said:

yikes, that post is making me twitch. I'm glad it seems to be all worked out now. 

Oh I have enough condo horror stories in the last two years that have made me wonder if I'm turning this into a rental when I leave. Definitely enough that I'm only looking at sfh from now on (which i 98% was anyways before this). But my unit is downtown walking distance to everything so in reality it's quite rentable and with my refi my profit is prob 300 or so a month if I did.

Wanna hear the horror stories? A few months after they finished the exterior the roof work began. I guess we relied on who the insurance picked and one day the fire alarm went off for 45+ mins. (I've been wfh for two years so was home for this.) Ironically the next day was supposed to be the annual fire system inspection so I text a friend who rents a unit on the other side from my BFF (twoish buildings on both side of the entry street/drive) to see if his side was doing it earlier. It was not so I was asked to check out his unit since he got a call about water and I did not. Walked into the 5th floor unit and stepped into prob an inch of water. Water dripping out of every fixture in the ceiling, down the walls. Bad enough once described my boss had no problems with me helping out as i tried to rescue what I could. The construction crew fell through the roof and into a springer sprinkler pipe. Queue chaos and no one knowing what the fuck to do. My poor friend has had to gut her unit and fight with insurance to get it paid for. Did I mention the guy who was renting it does fire protection systems for a living? That fucker wrote up dozens of pages about what happened based on his knowledge and my texts/calls for our friend to use in her case. I love him.

That was summer or so. A few months ago the main water line on my side was leaking. Took a couple days to get the parts to fix but like 6 hours after it was fixed it burst and fucked up a lot of shit in part cuz it failed in the middle of the night. Lucky it was on the first floor vs the roof of the other. But still a lot of damage.

Our HOA didn't go up this year so I guess insurance is covering both instances. But Holy fuck is it giving me second thoughts!

[chiver78]

yikes. I would run, fast. I don't wanna imagine what the next thing to go wrong could be. 😬

[justme]

Ha! I debated it. But I have no where to run. And we now have a new roof so that won't happen again - and was a fluke to be right over the sprinkler line. 

It is making me rethink renting the place out when I do move since there's all this stuff I have no control over. 

[steph08]

I just refinanced with better.com in September. We built our house and moved in in July, so they required an appraisal because we had no idea of the value besides what we paid for the land and construction. Appraised for about $65k over the combined price of land and house. Appraisal fee was $550, I think.

Our rate is 1.5% and we received a 2k Amex credit as well, which was about half of the closing costs.

[CCL]

Jan 16, 2022 23:45:21 GMT -5 steph08 said:

I just refinanced with better.com in September. We built our house and moved in in July, so they required an appraisal because we had no idea of the value besides what we paid for the land and construction. Appraised for about $65k over the combined price of land and house. Appraisal fee was $550, I think.

Our rate is 1.5% and we received a 2k Amex credit as well, which was about half of the closing costs.

Whoa! I've never even heard of a 1.5% mortgage rate. I used to have a home equity line at 1%. I should have kept it.

[steph08]

Jan 17, 2022 11:37:07 GMT -5 CCL said:

Jan 16, 2022 23:45:21 GMT -5 steph08 said:

I just refinanced with better.com in September. We built our house and moved in in July, so they required an appraisal because we had no idea of the value besides what we paid for the land and construction. Appraised for about $65k over the combined price of land and house. Appraisal fee was $550, I think.

Our rate is 1.5% and we received a 2k Amex credit as well, which was about half of the closing costs.

Whoa! I've never even heard of a 1.5% mortgage rate. I used to have a home equity line at 1%. I should have kept it.

I lied - I just checked it and it is 1.75% for 15 years. 

I was incredibly happy with it. Though I do pay additional principal each month - $2.98 to round it up to the next even number.  

[Deleted]

Jan 17, 2022 11:37:07 GMT -5 CCL said:

Jan 16, 2022 23:45:21 GMT -5 steph08 said:

Our rate is 1.5% and we received a 2k Amex credit as well, which was about half of the closing costs.

Whoa! I've never even heard of a 1.5% mortgage rate. I used to have a home equity line at 1%. I should have kept it.

I wonder if the 1.5 rate required paying points. I thought I was doing well at 3% fixed for 15 years but I think DS and DDIL recently refinanced to something a bot lower over 30 years.

Home Equity LOCs are typically floating rate so I doubt you would have had that 1% for long.

[steph08]

Jan 17, 2022 13:00:51 GMT -5 @athena53 said:

Jan 17, 2022 11:37:07 GMT -5 CCL said:

Whoa! I've never even heard of a 1.5% mortgage rate. I used to have a home equity line at 1%. I should have kept it.

I wonder if the 1.5 rate required paying points. I thought I was doing well at 3% fixed for 15 years but I think DS and DDIL recently refinanced to something a bot lower over 30 years.

Home Equity LOCs are typically floating rate so I doubt you would have had that 1% for long.

I think I did pay 1 point to get the rate at 1.75%. I think no points would have been around 2.5 or 2.75. The extra $2k was worth it to me.