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Refinancing Can Lead to a Happier You

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Don't count on any 60-day closings!

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After six months and five days, my home mortgage refinancing closed this week.

Please allow me a moment to savor the achievement of my latest personal goal! I locked in on a rate of 4.75% for 30 years and in exchange for the dubious opportunity of extending my debt until I'm past the age of 80, I lowered my monthly payments by $421.

If you are contemplating a new mortgage or a refinance, I remind you to prepare for the worst. There are measures you can take for a better result. (See So, You Say You Want to Refinance?)

I refinanced with my existing mortgage holder, JPMorgan Chase (JPM). I tried to capitalize on the bank's current offer of 1% cash back that would take $10,000 or so off the principal balance for the life of my loan. But, naturally, it may be unavailable because my application preceded the launch of the promo for new loan originations.

It's no secret lending practices have been tightened all over. Bank of America (BAC) turned down the refi application of a 40-year veteran of the company and her husband, a BofA customer since age five.

The best part of my whole experience is that I was able to handle the closing at my house and I got the chance to meet Shane Weatherington, who moonlights as a notary by day and works full-time as a newspaper pressman by night. He's one of the lucky ones.

While signing and initialing the stack of documents required to close out the transaction, I asked all about my notary's two children and got his bird's-eye perspective on both the state of lending and the newspaper business.

The notary told me the pace of his mortgage-fueled day job slowed down for a while, but is picking up again as interest rates continue to decrease and banks unclog some of their backlog. He's seeing more creative financings. Last month he did a closing involving four people -- a loan reminiscent of an era when more generations lived under one roof.

Printing newspapers, however, is a dying trade. Weatherington works for the North Jersey Media Group, but used to be able to earn extra on weekends operating the presses at The New York Times Co. (NYT). The union now hands out that work -- when it's even available -- to the legions of unemployed pressmen.

Weatherington figures he'll have to return to school if he gets laid off. He's been working as a pressman for 16 years, ironically the same number of years I've lived in the home I just refinanced!

If I do the math, this isn't the wisest personal investment, even though it reduces my short-term costs. It's the second time I've refinanced the home -- the first was to take out the required equity as part of a divorce settlement.

I'd always been one of those people who pre-pay their mortgage a little at a time so as to shrink the overall term by a few years. Extending it well into my retirement could put me behind the eightball. So once I'm on sure financial footing, I intend to escalate payments once again.

MSNBC.com and Reuters offered an excellent wrap-up on things to consider as rates once again sink to historic lows and borrowers flock to seize the opportunity. (See Some things to consider before you refinance.)

As for me, the message I'd most like to convey is that it no longer makes sense to think of a house as a short-term investment. Make sure it's a home you could love for a lifetime. You may have to live there forever!

Any additional tips to share on your experiences with new mortgages and refinancings?
Post a comment below..


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