ElysianConfusion

May 8, 2012

It’s Official

My mortgage rate (still a 5/1  ARM) adjusted again. I thought it was going from 3.00% to (wait for it) 3.00% – that’s what the letter from my credit union said. But when I went to check my accounts, I noticed that my mortgage rate said 2.875%. Huh? Of course, I need to be sure about these things. So I called my credit union and explained my problem. They said they’d call me back after researching.

When they called back, they assured me that it did adjust to 2.875% (that’s 1% lower than the original, something I never expected to see). And today I got the mail, and with it came the letter confirming the rate. The credit union said they’d referenced the wrong index when they sent the original letter, and they have procedures in place now to make sure this doesn’t happen again.

On one hand – hey, less interest! I’ll keep my payment the same (it’s now $925 and change, we pay $1,000). This adds up to nearly one whole extra mortgage payment over a 12 month period! I might just have to add in a couple dollars just to make sure it actually is a whole extra payment. That’s something I wanted to do from the moment I got a mortgage, and I never had the flex in my budget to do so. How exciting is that!  According to this calculator, if I had a loan at 3.875% for 30 years for 210,000, and starting in June I paid 75$ extra per month, the extra payments will allow me to pay off my remaining loan balance 2 years and 4 months earlier. Paying off my loan sooner will save $10,291.60 in interest over the life of the loan. Yow!

Of  course, the fact that I have an adjustable rate mortgage means lots of things: I cannot predict where my rate will go in the future, and I can’t compensate for the payment adjustments I’ve had so far. It’s just a guestimate. Still, it’s exciting! Anyone know of a calculator that you can enter your yearly adjustments to date and predict how they’ll go in the future? Please let me know! At this point, the best I can do is be sure it will never go over 8.875% and it would take at least 3 years to get that high (and honestly, markets are not looking that good for that happening soon).

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November 3, 2011

It’s been forever…

Life gets in the way. But I was reminded by some asshole today that my blog sucks, so even if no one is interested, I’m going to post something just to piss it off. HA.

So – my home equity loan – easy to refinance last November or so – then I noticed rates went down so asked if we could get the new rate? YES! So it’s at 3.99 and that cost us NOTHING.

My 5/1, which arguably was a huge mistake, now has an interest rate of 3.00%. Every year that it has adjusted, it’s gone down. Crazy. It’s certainly working for us right now. For these rates and many other reasons, I love my credit union.  Find one for yourself! http://www.findacreditunion.com/

What else… last November we were at $352,211.05. Now we’re at $319,589.11. That’s $32,621.94 and I guess that’ll have to be good enough. Our car is almost paid off, so that’ll help quite a bit. For now I plan to throw that payment at debt, then I’ll start saving for the next car.

There really is something to using those debt snowball spreadsheets – even if you’re doing an avalanche or whatever. Just seeing that it’s possible for ALL the numbers to go to zero is really empowering.

At our current payment rate, it looks like everything but the mortgage could be completely paid off by March 2015. That’s not so far away. And maybe it could go faster if we work out our snowflakes.

Maybe I’ll do another update soon to see where we are on reducing specific debts (credit cards, car loan, mortgage, student loan).

 

November 24, 2010

Asking Always Pays

Filed under: budgets,debt,money — by elysianconfusion @ 4:56 pm
Tags: , , , , ,

Well, I finally bugged my darling husband into calling our credit union to see if they could do anything for us. We’re in the lovely position of being at least not underwater on our house, but certainly not at 80%, which makes it really hard to refinance at lower rates (or fix already low ones). And our credit union services our loan (good), but that means it’s not a Freddie Mac or a Fannie Mae (bad, because then there’s no Making Homes Affordable for us).

I mentioned my distress last week, but now I have excellent news! The bank is sending us paperwork, fixing the home equity loans (together) at 4.99 (down from 6.5 on the big one and 4 but variable on the low one) for 10 years. This reduces our rate, our interest and our term. It does increase the payment by 54$ a month, but it’s TOTALLY worth it!

I think we’ll save about 5k in interest (without including snowball planning). Also, there is no penalty for pre-payment and there are no closing costs.

I was feeling so frustrated, because I already owe them the money, they should want to help me — and THEY DID! Hurray!

So, anyone out there thinking it’s not worth asking — you’re wrong. Even if you don’t get what you want, at least you know you asked!

Happy Thanksgiving!

March 19, 2010

What’s in an ARM?

I’ve heard lots of bashing of the adjustable rate mortgage (ARM) and honestly, I do get it… mostly. Except I feel like we got the best rate ever — in 2004, we got a 5/1 ARM at 3.875%. Now that’s a mighty sweet rate! I was totally freaked last year though, when the five-year fixed rate was coming to an end… what next? What would it be? Should we refinance? Could we refinance?

I’ve mentioned before that we’ve put a lot into our house. It’s the source of a good amount of our debt… our mortgage is only 17% of our gross monthly income, and 23.2% of our net. If you add in our home equity loans it’s more like 24.7% of gross and 33.5% of net. I guess the rule of thumb is not more than 28% of gross. So, shockingly I think we’re better off there than we should be. In *my* opinion our debt is insane.

Anyway. The time is approaching for our next adjustment (last year we got the letter with the new rate on March 25, and the rate went down! I was shocked, it actually went to 3.5%). So, today I was trying to figure out how they got the rate last time and what it might be this time.

Basically, ARMs are tied to an index, and you have to read your loan documents to figure out which index it is. According to mine, “The ‘Index’ is the weekly average yield on United States Treasury securities adjusted to a constant maturity of 1 year, as made available by the Federal Reserve Board.” Then they add 2.75% to the current index. (It’s the index 45 days before the rate change (5/1/10), I think that’s 3/17/10.) I googled that, and I think I found it at http://www.federalreserve.gov/Releases/H15/Update/.  I think it’s the treasury constant maturities 1-year. I selected Business day — sounds like it’s the average? Or maybe it’s the weekly? Last year the weekly for 3/13 was .70, and that’s what they used in the letter last year… 2.75+.7=3.45, not 3.5 . It says they round up to the nearest 1/8 of one percentage point (0.125%).

This year the weekly for 3/12 is .39, so .39+2.75=3.14 — I have no idea how they’re planning on rounding that. I may have to ask.  If only I could fix 3.14% we’d save $5,485 over the life of the loan (that’s in my version, not the 24 years remaining on the loan).  Of course I can’t fix this rate. My credit union is nice, but not that nice! But I have to say, getting an ARM seems to have been a reasonable decision for us. An ARM at 3.875 means that our rate can’t go up (or down) more than 2% per year, or more than 5% ever, so it could never go higher than 8.875%, and as I’m searching for the national average contract mortgage rate (1963-2009) it looks like it started pretty low in 1963, at about 6%, peaked in the early 80s near 15%, and is down to about 5% right now. Overall, our max rate looks to me to be under the curve, so I’m not going to worry (for now) about refinancing and all the costs that brings. (Plus the stress of worry whether we’d qualify — this housing market is awful.)

It will be fun to get the letter and see if I’m right!

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