There are some things I really don't understand even if I manage to deal with them when I have to. Health insurance makes no sense to me. I am really lucky that I have never had a debilitating disease or accident, because I doubt I could navigate the red tape. I would probably end up dead. The stock market is a mass of confusion. People make money on it? How? I have trouble with my 401K! And mortgages.
I bought my house in the spring of 2001. Homeownership was NEVER something I aspired to. I felt no desire to own, no need for roots. I figured if I continued to rent, all the repairs, the details would be someone else's problem. "You're throwing your money away," I was told. This just confused me. I had a roof over my head and someone else to fix the A/C, the roof, the dishwasher. It seemed like a good deal to me. But there was Chance*, my 80lb four-legged baby. Love of my son's life. Do you know how hard it is to rent a place with an 80 pound dog?
So, when the owner of the house I was renting returned to to the states from overseas, I started looking at homes for sale. It was a good time to buy, prices were much much lower than they are now. I looked for a couple of months before I bought and I think I got a really good buy. My mortgage payment for a 3BR/2BA house with a garage, a pool and a fenced yard cost less than rent on an apartment. And I have grown to enjoy homeownership, despite the $4000 for the new roof (before the really bad hurricane seasons), the fire in the garage, the leaks, the OUTRAGEOUS jump in wind insurance (after the really bad hurricane seasons) the... you know, homeownership woes. It is nice to know it is mine as long as I make the payments. And, I have built a lot of equity.
Then last month I received a notice from my mortgage company that my payment was going up almost $300 a month OR I could pay them a nice sum of $2000, because my escrow account was short, for the 7th year in a row. Now, I don't like to criticize much, but isn't it the mortgage companies job to plan for this sort of thing? My taxes and insurance barely went up for the first 5 years I owned the house, why did I have to write a check every February to make up the difference? I understood last years check of $1100, my insurance went up... but only about $700. The difference this year was about $1000 so why the huge check? So I decided to refinance, without an escrow account, paying my own taxes and insurance. And now I am in a quandry.
Closing is scheduled for tomorrow at 1:00. I am taking a loan for $110,000, taking out a small portion of the equity to get myself a brand new fancy kitchen. I was told that closing costs would be about 2.5% of the loan. I can do math. 2.5% of 110,000 is 2750. I was given the total on closing this afternoon and it is $4900. Do you see my problem? I had even figured closing might be $3000, but that is almost a $2000 difference. Am I a moron? Do I just not understand the way these things work?
Plus, some of the 'fees' seem fishy. I understand the 1.5% origination fee, but then why am I paying another $695 to the bank? The original paperwork said there was $175 for the NOTARY, but the final paperwork (which they sent me because I was yelling) changed the $175 fee to an escrow fee. Did I mention that I am not going to use an escrow account? I am paying my taxes and insurance myself.
Of course, the interest rates are on the rise again (how can that be?), so if I don't use this loan, I could end up .25% or .5% higher rate and then I am not even sure it would be worth it to refinance. And I don't know anyone to ask. DSD is just as lost and confused as I am.
What to do? Hopefully I will figure it out, but if anyone out there in Blogland has some advice, I am listening!!
*Chance passed away about 2:00 AM on January 2, 2005. I miss him every day.