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Archive for September, 2009

Surprise House Refinance

Thursday, September 17th, 2009

We had a pleasant surprise in the form of a phone call last week.  It was our bank calling to let us know we qualify for a special refinancing program.  Immediately it sounds like a scam, but the account manager said he’d get a package sent out to us to review.  Sure enough, a few days later we got a package in the mail that very much appears to be from our bank.  I wasn’t the one that talked to the agent, so I gave them a call back later to try and find out more.  With the interest rate drops that happened over the last year I was chomping at the bit to try a refinance to get our rate lowered, but I absolutely knew the value of our house had dropped too much.  You can walk into the model home here in the neighborhood and ask them to build a house 500 square foot larger than ours for $30k less than we paid for this one two years ago.  We’re upside down on the mortgage.  So, I just put out of my mind the option of refinancing.  Well, it turns out (I think I read everything we have from the bank and I don’t recall this in any disclosure) that our loan is only serviced by our bank.  The money actually came from Freddie Mac.  As Freddie Mac has been bailed out by the government, they’ve required some programs be started to shore up their mortgage base.  We qualify for one of these programs.  It’s designed for people like us that are upside down on the mortgage to get a lower rate.  So, if everything goes through we’ll get a rate almost a point lower.  It’s not the 4.5% that would have been possible when the rates really dropped, but every bit helps.  We weren’t having any problems paying before, so we’ll be able to pay it off a few years earlier.  Yay.  Well, I shouldn’t count the chickens before they hatch, but so far so good.