Observations on life

A simple solution to re-mortgaging home loans

In 1987 I purchased a house for $159,000 putting 15% down and taking a thirty-year fixed rate mortgage at 9.45% (yikes). Just before we were to close the (small local) bank called and said they wanted more of a down payment. “Hey, we had a deal and if I put more down I will wipe out all my available cash and I am not going to do that,” I said. When I told my wife of the call she called the bank president and said if we didn’t get the mortgage as originally agreed she would call every real estate firm in the area and tell them how his bank did business … a few days later we had the original mortgage.

Fast forward a few years; since 1987 was the height of another housing bubble, for the next ten years or so our house was not worth what we paid for it and we had no equity or as the saying goes today, we were under water.

During that period interest rates dropped significantly. What to do; re-mortgage of course. We called the bank holding the in-house mortgage about refinancing and were met with an entire application process, fees, approval process, etc. Wait a minute, what do you need to approve, you know we have paid on time for the last ten years, you know we are a good risk, you know what the house is worth, you know everything. If you are going to put a long time customer through all this, we will look around at other banks.

What to do, tell your wife to make a call of course.

She calls the mortgage officer and relates our story going back to 1987. He tells her that the lending committee is meeting the following Wednesday and he will see what can be done.

The following Thursday we receive a call, they are dropping the interest rate on our current mortgage to the extent our payment drops by $300 per month, no application, no fees, no nothin, just a letter a week later modifying our loan and telling us our new payment.

There are a few lessons here:

Sometimes the old ways of doing business work
Sometimes smaller is better than larger
Common sense can prevail
Sometimes it is easy to solve a simple problem in a simple way
You don’t always need government agencies, rules and regulations and someone elses money to swim to the surface … and most of all

marry the right women if you want an affordable house!

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Categories: Observations on life

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