If you make it to the bottom of today’s post, there is a reward for you! True story.
My wife and I are in the process of refinancing our house. When we bought the home a year ago, it was about as painless of a process as buying a home can be. There was some grunt work on our parts, but by and large it was what you would expect; chasing down bank ledgers, getting statements, providing numbers, signing papers, etc.
This year we wanted to refinance. It has only been a year, but the interest rates have dropped enough that it meant freeing up some cash each month that we could then focus on debt in the short term, which was critical given our situation.
What we have found is that the process of refinancing has been FAR more imposing than the original purchase. Not only has it taken months of work to make it happen, but it has also required me to provide what seems to be the same information several times over.
At a certain point in the refinance process, I was also working on getting some debts consolidated at a much lower interest rate (%29.99 > %13.99), but before I did this I asked our loan officer if this would affect anything. I was told it would be fine, since my credit rating was already verified and the interest rate of the refinance was locked.
Smash cut to Thursday morning when I got a call from the same loan officer asking me why there was brand new debt on my profile. I remined her that it was the consolidation loan, and here response was, “Well, Dave, you personally took this debt consolidation loan out, and when you had originally asked me about it, I thought it was to consolidate your own debt. Instead you used it to pay off debt that was in your wife’s name, hence it now shows as new debt on you, and thus we probably can’t secure the loan for you at this time.”
Let’s unpack this for a moment:
- Because I was attempting to lower our overall interest, I got dinged, even though we collectively had not acquired any new debt. We haven’t charged a dime to a credit card or opened any kind of new account in the better part of a year.
- The bank that we have the home loan through is the same bank that we are refinancing through. That bank is telling me that they can’t refinance because they feel my monthly income to payment ratio is too out of whack, yet they are willing to allow us to continue making our current payment that is much higher than the refinance would be.
I know I’m bitching… I get it. This is my mess, and not the bank’s fault. What bugs me is the lack of the human side to these types of things. I explained to our loan officer that we’ve paid off $17,000 in debt this year, and will hit $50,000 by the end of the year. I explained that we’ve never missed a payment on any account, and that none of this debt is new, regardless of which name it’s currently under.
The loan officer (who is a family friend and a fantastic person) was very sympathetic, but she can’t do anything about it. It comes down to the Underwriter.
So now we wait. There is a very tiny chance that the Underwriter will choose to ignore the loan, and give us the refinance anyway. Tiny chance.
Plan B is that we START THE ENTIRE PROCESS OVER next month after we make the large payment on the debt, which will put my income to payment ratio in an acceptable spot, yet could take months to once again apply for and get approved.
It’s an odd thing, because I tried to be as forthright as possible with the my finances and numbers, and it wound up being the thing that potentially killed our refinancing efforts. I could have easily consolidated those loans under my wife, and that would have somehow been okay, but that wouldn’t have been the right way to do things.
I’m going to stop complaining now, but I wanted to bring up one other subject as it relates to this…
At a certain point, before we became much more financially literate, my wife used to say things like, “We can afford this home. The bank wouldn’t have loaned us the money if they didn’t think we could afford to pay it.”
Not only do we now know what a crock this statement and belief is, but our loan officer stopped just short of calling our last loan (and those involved in securing it for us) sketchy to say the least.
She told us that our original home loan shows nothing about me owning the car I owned for 3 years at the time of purchase, and it’s missing at least 3 small to mid size credit cards accounts from the paperwork. She can’t find record of them anywhere, even though I am SURE we disclosed them at the time of purchase. I think if you can extract one thing from this blog, it’s that I don’t mind being open and honest about my life. I would have had no reason not to give them every bit of financial information at the time.
I try to make the Friday posts as positive as I can, because I want to send you into the weekend with a bit of an upbeat post, but I’m typing this on Thursday, the same day that this all went down, and I simply had to vent.
So let’s end on a high note by me saying this:
After dealing with all of the hassles and headaches of the above on the phone, I headed downstairs, and there was my wife singing in the kitchen while my son and daughter sat and played with our new tiny puppy on the floor. The sun was out, as evident by our cat bathing in the rays from his bed, and the house felt warm and wonderful.
Here is that puppy. She is incredibly cute.
Just a reminder to all of you (and to me) that the bank stuff, the meetings, and the stress all don’t mean jack. Try to focus instead on family, sunny mornings, and puppies!
Have a great weekend!
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