Over the last couple of weeks I have been dealing with the new reality of real estate dealings. I had been working to get my house refinanced to a 15 year note instead of the 30 year note I originally signed when Mommy Pig and I built this house in March of 2012. The appraisal came in low. Very low. I had put 20% down on the original loan when we moved in, but the new appraisal came in $40,000 lower from what it had been 1 year earlier. Is the market bad in North Texas? Absolutely not! So what happened?
I learned from my broker that since the housing collapse that new laws have been put in place to make everything more difficult. I first noticed it when I was applying for my original note and the bank wanted records on some deposits going into my bank account. We had to try to explain every single incoming check. What a pain. Now Appraisers have no contact with mortgage brokers for more impartiality. And to boot, it appears that Appraisers are concerned about losing their license so they might, just might, under value property to protect themselves.
“Daddy Pig, how do you know that?” I don’t. But I can tell you that I filed a dispute form and provided sales data from my builder who built 3 more of the exact same floor plan as mine, on lots of the same size closer to my home than any of the comparables. The results? All homes sold for approx. $35,000 more than my home. So the appraiser missed the mark by $75,000 with the value of my home to the 3 homes built within 3 to 6 months ago. The response to my dispute form was that if it isn’t in MLS then it doesn’t count. (Even if it’s true).
Enough whining Daddy Pig. Now what do I do? The mortgage broker is trying desperately to get this deal. He is pitching me that I can pay PMI (Private Mortgage Insurance) for only 27 months and then I’ll have 20% equity and it will fall off. All of this for the low price of $108 per month for 27 months. So I went from paying 3% for a 15 year note with no money out of pocket so now a 3.32% 15 year note with PMI payments for more then 2 years. No thank you.
I ran some rough numbers tonight and I’m planning to pay additional money each month as if I did have the 15 year note. The result will be an additional $850 in principle payments per month. I’ll finish paying it off in 15 years from now and I will still have saved over $100,000 in interest payments vs. paying out the normal 30 year payments.
On top of that I’ll have the flexibility if a situation comes up to back off my accelerated payments if I absolutely have to. But the bottom line is that I’ll have a 15 year mortgage, I’m just doing it a different way. So early retirement, I’m still coming for you!