I’m sure many folks have been following the recent news regarding the government attempts to forestall foreclosures. There have been moves to make it easier for those in distress or “under” on their loans to refinance (although those may be delayed). Of course, it doesn’t always help. There were recent reports that most folks in the SF Bay area wouldn’t qualify, and I’m sure the same is true down here in SoCal. Meanwhile, values keep falling — the median home price here in the San Fernando Valley has dropped to $352,000. There are some efforts to make refinancing easier for Californians, but who knows when it will happen.
Refinancing has been on my mind a lot. When we last refinanced our house (to get out of the temporary Option ARM we did for the purchase while we sold our old place), we did a 5 year fixed/25 year variable loan. This was back in 2006. So we were looking at the loan going variable in 2011, property values dropping (and our equity shrinking), and interest rates dancing with significant extra spread for conforming jumbo loans (above $417K)… and still significant points. So, for the last almost 2 years, we’ve been working on refinancing, waiting for the rates to drop before the property values dropped more. A few months ago, however, rates dropped…. and our credit union let us know they weren’t adding premiums for conforming jumbos. So we applied. Even better, the appraisal came in right where we needed it to be for 80% LTV to make what we needed to finance work.
We are now the proud owners of a new 30 year fixed loan (well, it funds Monday), 5.125% (dropping our current rate by 0.5%), and 0 points. Needless to say, I’m much relieved. Now to pay back our savings accounts for the various fees, the interest (both old and new loans, 1 month), and the hazard insurance that had to be paid early. But that’s the easy part. The worry about the loan eventually going variable, and the value dropping to where we couldn’t refinance, is now over. Plus, we have a shiny professional appraisal to waive in front of the County Assessor come next property tax assessment, when he tries to argue that the value has gone up.