Part two of Refinance

Good day to everyone,

Sam and I closed on our refinance last week. We learned a few things during the process and figured we would share our experience with you.

First, the process took a little longer than we anticipated. When we called around and got quotes from multiple different companies, we were expecting 2 weeks to 4 weeks at max to close. We were told by bigger companies such as quicken loans that closing would be 2 weeks away from when they received our application. The company we chose, ended up taking 7 weeks to close from when we applied.

Here are some things we know influenced this to take longer than we thought. First, they are a smaller bank, we chose Security Financial Bank for our refinance. They do other banking besides loans, so we expected it to take a little longer. Next, I own a small business and with owning a small business, we get the joy of sending in a lot more paperwork than the average W-2 employee. Along with the extra paperwork, if you own a small business during covid-19, you now have to prove you are an essential business and receiving income. We had to provide a year-to-date profit and loss and balance sheet to show our company was making money during the pandemic. The last thing that held us up, was our business switched its filing this year from a Limited Liability Partnership to an S-Corporation. We did this for the tax benefit of filing as an S-Corp.

Since we switched our filing, they said they could not prove we were a business, so they could not approve us for a loan through their normal channels of loan approval. A couple days later, they emailed back saying they could try to get us in-house financing for a 10 year fixed mortgage, with a 2.25% interest rate. We were very happy with that option and asked if we could try that. It ended up going through after a 5 week process but it was worth it. If we were to only pay the minimum on our mortgage each month, by switching from a 30 year fixed at 5.5% to a 10 year fixed at 2.25%, we will save about 18 years of paying mortgage and $90,000 in interest.

We are very happy with the process even though it took a little longer than expected. Some other things that came up were that we had to get an in home appraisal done. Typically for a refinance, they go off the estimated appraisal and may do a drive by of the property but since it was in home financing, they had to do an in home appraisal. Also, my business partner, Ryan, and I got a pre-approval letter in this time, so we could buy some real estate. Sam and I quoted out 6 other companies for refinancing. So, one week before closing, we had to write a letter of explanation for all the credit checks we had since starting the application process with them. It was understandable, but keep in mind if you are looking at a refinance or getting a mortgage. Be careful on applying for other loans are credit lines during this time, which may need an explanation.

Lastly, make sure you are checking your email frequently or you have email notifications on. We responded promptly to most emails but if you do not know they are coming in, it could push back closing even further. Overall, we were very happy working with a local bank. Even with it taking a little longer, we got a short loan term, got the lowest interest rate we have heard of, saved over $2,000 in closing fees compared to a bigger loan company, and got to work with local people in our area.

Thanks for reading and have a great day!

Your life Tutor

Shaun Tutor