Home Federal Blog
The Refinancing Process
A Client's Account
The following testimonial is a personal account of an experience provided to Home Federal by one of our valued clients, with their permission to share.
My husband and I recently refinanced our mortgage with Home Federal – cutting both the length and the interest rate of our previous mortgage almost in half! Here’s our story:
We bought our home together – the first home for both of us – just over three years ago. We only had 3% down payment at the time, so we took advantage of a first-time homebuyer program with Home Federal, and ended up with a 30-year mortgage at 4.0% interest which was a great rate for us at the time, especially given our financial situation back then. The main downfall was that with only 3% down we had to have Private Mortgage Insurance (PMI) until we had a certain amount of equity built up. PMI added over $200 to our mortgage every month.
After three years of mortgage payments, and watching other houses in our neighborhood sell for much higher than what we purchased our home for, we decided to email our Mortgage Lender at Home Federal to see if we were eligible to get rid of our PMI. Sure, she let us know next steps to get rid of PMI, but she also suggested we refinance because the interest rates were so great.
I’ll admit, I thought refinancing was something someone did only when they needed additional cash or help making monthly payments – something you wanted to avoid. Boy, was I wrong. I don’t know if I was more surprised at all the benefits of refinancing, or how easy the process of refinancing was.
Our Mortgage Lender let us know our options: refinancing our 30-year term into another 30-year mortgage and what the rate and payment would be compared to 20-year and 15-year options. Better yet, she let us know that our property value increased enough that, whichever option we chose, we would be able to get rid of our PMI as well!
Now I know that not everyone’s financial situation is the same, but here was ours: we didn’t have a problem paying our mortgage, we were just sick of “throwing money away” on PMI each month. So even though another 30-year mortgage would’ve dropped our monthly payment by almost $400, we actually opted for a 15-year mortgage that increased our existing payment by $100/mo. Why? Because our mortgage will be paid off when I’m 45 instead of 60 and our interest rate dropped from 4.0% to 2.375%! (You calculate the interest savings on that one, and it was a no-brainer for us.)
The only hold-up was the “Estimated Closing Costs” and the “Estimated Prepaids” listed on our refinancing quote, as we didn’t have that kind of cash in our pocket at the time to put down, even though we knew the costs were worth it compared to the interest savings. When we let our mortgage lender know that, she simply replied:
“All costs to refinance are rolled into the loan so you shouldn’t need anything out of pocket.”
That sealed the deal for us. The process from there was a breeze, and done almost entirely online! We filled out the loan application on JustCallHome.com, provided a handful of personal and tax documents to the team at Home Federal via secure messaging, completed electronic signatures on some consent forms and disclosures with DocuSign, and a quick 20-minute meeting for signatures at the title office. That’s it.
I bet if more people knew the benefits of refinancing, there’d be a lot more people taking advantage when rates are low. Hopefully by sharing our experience, it’ll help with awareness! Both my husband and I were astounded by how easy and stress-free the process was, as our Mortgage Lender kept us updated every step of the way. All of it was done by email – we didn’t even have to go to the bank once!
Thank you, Home Federal!
• Whitney (& Joe)
Each of our clients’ loan experiences differ based on their personal financial situations and qualifications. The above experience is their unique situation and, while it may be similar for others, it’s not guaranteed for all loan applicants. Contact any lender on our mortgage team at Home Federal to find out what you may qualify for in terms of loan options and interest rates.