***I want to make things clear that I am writing a review of my refinancing process and am IN NO WAY being compensated for this post, nor is AmeriSave even aware that I have a blog. I figure with low interest rates, refinancing might be worth considering for some of you, and it might be helpful to see what my process has been like.***
Seventy-Seven days ago I wrote about my decision to refinance our mortgage. When we bought our house, we locked in at 4.125% and have a PITI (principle, interest, taxes and insurance) payment of $1,689 each month. In January, I noticed rates were considerably lower and figured it was time to wet my feet in the world of refinancing.
I contacted a handful of lenders (my current lender included) and got a few quotes. After some number crunching and phone calls with various companies, I settled on AmeriSave, an online lender out of Georgia. I’d never heard of the company before, and odds are you haven’t either.
I read some reviews, and as expected there were a lot of positive remarks and a lot of negative ones about the company. It seemed that people with generally good credit and a decent income had good things to say.
When it comes to refinancing one must not be so narrow-minded, that the only number you worry about is the interest rate on the loan. The far more valuable number to determine whether or not you should refinance is the break even period. That is to say, how long will you have to live in your house to make the refinance worth it.
I could have gotten a 30 year fixed rate of 3.25%, but that would have cost $12,000 in points and fees, meaning I wouldn’t break even for over a decade. I don’t know if I’ll still be in this house ten years from now so it would be silly to take this deal.
If I was going to refinance I wanted my break even point to be 12 months or less.
I locked in my rate with AmeriSave at 3.75% and they are covering all of my closing costs thanks to a massive lender credit. That means my break even point is zero months. Or in other words, I come out ahead starting the very first month!
How dope is that!
Again, I could have taken a better rate with Amerisave, say 3.5%, but I would have had to bring money to closing and had a break even point at like 3 years.
The big benefit to having a zero month break even point is that if rates drop even further over the coming months, there is nothing stopping me from refinancing again.
My new lower rate will save me $100/month, every month, for the next thirty years. LOVE IT!
What do you need to refinance?
I have had to provide a ton of documents to AmeriSave (via online uploading) for review by their underwriters. Things like…
- Three years of Tax returns
- Three years of W-2’s
- Three years of Business tax returns
- Four months of checking account statements
- Three months of pay stubs
- Proof of homeowners insurance
- One month of savings account statements
- About 30 pages of loan application paperwork
Fortunately for me, I have all of this information neatly compiled on my computer and it wasn’t too much of a headache rounding up the required documents. I’d estimate I’ve spent about four hours total compiling the correct documents and reading through the paperwork and good faith estimate.
How has the refinance process been?
Going with an online lender I wasn’t expecting things to go super smooth. I’ve read a lot of horror stories online, and my refinance hasn’t been without issue.
I was told that my rate was good for 45 days from the day I locked. Here we are on day seventy-seven. Things are moving at a snails pace. I get them what they need within a few hours or a day of it being requested, but it can be two or three weeks before I get any updates.
That said, my loan processor has been pretty responsive and if I reach out he gives me assurance that, although things are slow, my loan is progressing. He has extended my rate lock twice now at no cost, which is crucial.
I received word yesterday that my loan was finally approved by underwriting and that they are hoping to schedule closing later this week.
Would I use an online lender again?
You bet your sweet bottom I would. At the end of the day I care mostly about the cost of the loan and the interest rate I can get. The online lenders blew the brick and mortar banks out of the water. I called a few mortgage broker friends of mine and none of them could compete. I called my current lender to see if they would fight to keep my business, they couldn’t.
The process is not fast, that’s for sure (my original mortgage with a brick and mortar was approved by underwriting in 8 days), but I don’t care about speed. I care about money saved, and from my experience online is the way to go.
- Would you ever use an online lender?
- Have you refinanced? If so, had any horror stories?
- If your rate is above 4%, why aren’t you refinancing right now?