Home, Sweet Home
Housing in and around DC is expensive, but we love our house and our neighborhood. I wouldn’t mind if it were smaller (in fact, if my spouse would let me, I’d begin construction on a tiny house in Montana tomorrow), but the fact remains that I couldn’t think of a better place to raise our family right now.
We bought our house nearly three years ago, without anywhere near 20% down, so we’ve been paying Private Mortgage Insurance (PMI) — $8250 so far, to be exact. It’s an incredible waste of money.
So a few months ago, I started researching how to get rid of PMI and we finally decided to refinance. I naively thought that it would be a breeze because we already own the house, so we wouldn’t have to wait for a specific closing date, right? Sign the papers and bam we’ve got a new mortgage! Wrong.
We chose PNC Mortgage because we already have a checking account at PNC and the rates and fees were decently competitive. We applied officially on January 8, but didn’t close until March 9. First, the paperwork came, but was laden with errors. (For example, Nathan’s social security number and birthday were wrong. Apparently the bank wasn’t worried that I’d married a 63-year-old Park Ranger.) It took a month and a half to get that changed. Later our house was listed as being in Georgia. The change to put us in the right state (Virginia) was not made officially until the closing day. Day after day something new would go wrong. The loan processor would disappear for extended “sick leave” or “vacation” or the bank would wait until the last minute to check our employment status or file for the new title. As the closing date drew near, we had to sit through our loan officer and loan processor yelling at each other via email. It was the most unprofessional process I’ve ever been through. While we waited, the fees rose a bit and our target closing date of Feb 26 came and went without the bank proactively keeping us in the loop. I had to pay another month of our expensive mortgage and squeeze in a closing date between travel and a major quarterly meeting. The rates had since gone up, so we were stuck with PNC’s locked-in rate unless we wanted to pay a lot more over the life of the loan to switch banks.
Why am I telling you all of this?
Mortgage Refinance Lessons Learned
- I wouldn’t use PNC Mortgage again. Ask friends for referrals (which I did) and be patient enough (which I was not) to use one of them instead of someone you find on your own.
- Set expectations low and be patient. Refinancing is a major pain and takes a long time. Be prepared for that when you start.
- Refinance at a time when you’re not busy. Just like buying a house, it takes a lot of back and forth to refinance. Do it when you’re not busy and at a time when you won’t be out of town around closing day.
- Save what you save. It was easy to start thinking about where I’d re-appropriate the money saved, but instead of finding a creative way to spend our newfound cash, I’m saving it. It will likely go into a major home maintenance project someday, but for now, it’s just earning me interest in the bank.
- It was worth it. We saved nearly $400 a month after refinancing and many thousands of dollars over the life of the loan. There are many calculators like this one and this one that can help you decide whether to refinance and will show you how long you need to stay in your home to start making a return on investment.
Do you have any refinancing advice? Share it!
I was elated last week to discover that if I switched from Verizon FiOS to Cox that I would save $18/month and increase my internet upload speeds by 25 Mbps. We were very happy with Verizon, but $18 is quite a bit and not something I could pass up. So, I called Verizon and asked if they could lower our current price. They couldn’t, so I put in an order to cancel our service. Nothing personal, it’s just business.
Before I did that, I talked directly with a live chat agent at Cox and nailed down exactly how much the taxes and fees for their service would be. I was told there was a $30 self-setup fee and a $7/month modem rental. Great! I read some reviews. Both Verizon and Cox are universally hated, so I gave myself permission to proceed.
After canceling Verizon, I went back to the Cox website to sign-up. Everything was in order, except that the modem price was now $10 instead of $7. Again, I live chatted and found out that in my area, the single-band modem ($7) is unavailable, but I might be able to go to the store and procure one. Fine, so I called the number listed for the store and got the main, centralized Cox answering system. Instead of the option to speak with a person, they have an answering machine. That’s it?! I left a message and waited. My call was supposed to be returned by the next business day. Several days passed and I heard nothing. So, I called again and got the same answering system.
By this point, I had a bad feeling that this would be cable provider hell all over again. The incredibly long list of why I won’t use Comcast ever again even if they’re the last provider on earth deserves its very own post sometime. However, service is something that Verizon FiOS actually does well. A real person always answers and there is no transferring between departments.
I decided the headache that I’m getting is probably just the tip of the iceberg and if it’s this hard to become a customer, I can’t imagine what it would be like being one. I called Verizon and canceled my service cancellation…and I won’t look back. I won’t switch internet providers this year. I’ll find other ways to save money instead.
As I mentioned in my reflection on two months of minimalism, trying to save $25K in one year is tough, especially if you don’t start finding ways to save money immediately. Right now, I have just 10 months left and I’ve saved a meager $271.94 which is really amazing if you ignore the fact that I have $24,728 left to save.
So this month, I’ll be looking at all of our recurring payments and exploring whether there’s a way to save money on each one. When I pulled together the list, it seemed a bit daunting:
- Washington Gas
- Fairfax Water
- Cell Phones
- Dominion (Electricity)
I guess I can look at this list not just as the long list of people taking my money, but as a lot of opportunities to save it.
According to an article in the Washington Post yesterday, the Bureau of Labor Statistics did a study that shows that “on average – Washingtonians spend more on housing and related expenses (utilities, furnishings, and equipment) than New Yorkers and San Franciscans.” At least we did in 2011-2012.
2011-2012 Housing Expenses by City Source: US Bureau of Labor Statistics / Washington Post
I find this hard to believe when tiny apartments in San Francisco are going for an average of $3,120, but this seems to be a huge increase over the last two years. DC may no longer be on top. However, it is still true that the DC area is way up there when it comes to expenses.
Which leads me to believe that if you can be a minimalist and reduce expenses here, anyone can.