Tag Archive: Personal Finance

Refinance Completed

My refinance was completed last month. My mortgage was refinanced from Bank of America (30-year fixed at 5.25%) to Star One Credit Union (30-year fixed at 4.75%). Because of the very attractive rates during this time, the entire process took a long time. In fact, from application to final funding, it took more than 12 weeks. This is well beyond the 60-day lock period. Star One honored the rate without any issues.

The following is the timeline:

  • Week 1 :9/28 Mon: Applied for Star One’s 20-year fixed loan at 4.75%.
  • Week 1: 10/2 Fri: Star One’s 30-year fixed mortgage dropped from 4.875% to 4.75%.
  • Week 1: 10/3 Sat: Instead of re-locking the rate, I applied for a new 30-yr 4.75% mortgage with Star One. This cost an additional $12 for the new credit reports. Re-locking the rate would have cost me $250.
  • Week 2: 10/6 Tue: Sent off the check to Star One to pay for the appraisal. Also faxed in some supporting documents.
  • Week 2: 10/7 Wed: I wanted to use an online title company EntitleDirect.com. However, the processing officer from Star One informed me that Star One’s policy is that the signing must be done in a title company office. Consequently, I dropped the idea of using EntitleDirect and picked Chicago Title, the title company which closed my previous refinance with Bank Of America.
  • Week 2: 10/10 Sat: House appraiser called to set up appointment for the house appraisal.
  • Week 3: 10/14 Wed: The house appraisal was done.
  • Week 4: 10/22 Thu: Appraisal report was posted online. Valuation is slightly higher than I expected.
  • Week 5: 10/30 Fri: Emailed the underwriter. She said that they were swarmed with applications and were currently processing applications from the first week of September.
  • Week 6: 11/02 Mon: I raised my concerns about the 60-day rate lock. The underwriter replied that the rate would be kept for me if they were unable to fund by the rate lock expiry date.
  • Week 10: 12/01 Tue: No additional progress were made in the month of November. On 12/1, Underwriter informed me that they would be processing my loan the coming week.
  • Week 11: 12/07 Mon: Received email from underwriter that my loan was approved.
  • Week 11: 12/11 Fri: Loan processor informed me that they were requesting the list of fees from the title company.
  • Week 12: 12/14 Mon: Escrow officer sent the list of fees to Star One for approval. Loan docs prepared and sent to the title company.
  • Week 12: 12/15 Tue: Received closing statement, revised it and set appointment for sign-off on the next day.
  • Week 12: 12/16 Wed: Sign-off the refinance in the title company’s office. I requested that the funding and closing dates not to straddle over a weekend. For the reason, read this post by TFB.
  • Week 12: 12/19 Sat: End of three-day refinance rescission period.
  • Week 13: 12/22 Tue: Star One funded the loan.

In total, the closing costs came up to be around $2100. The title charges (escrow +  title insurance) were about $1400, loan fees (appraisal + loan application) were around $600, and about $100 was charged by Bank of America to close out the old loan.

Overall, I am happy with the new rate but wished that the entire process could have been much shorter than the 12 weeks it took.

Unlike some who suggest to pay down the mortgage whenever possible, I plan to keep this mortgage to the full term. At the fixed rate of 4.75%, I am pretty sure I can find better opportunities elsewhere for any excess money that I have.

Reverting back to using checks instead of ACH

ACH transfers (or better know as electronic funds transfer) is supposed to be the new method of money transfer in the 21-st century. But strangely enough, I find that I am reverting back to using checks for some of my transactions instead of using ACH. The following are some examples.

Depositing money at brokerages

TD Ameritrade offers a very fast ACH system for funds transfers. Recently, after setting up two new links to my bank accounts, I used the system to move some money from one account to another. That however seemed to trip them up and their compliance department sent me a secure message telling me not to use their ACH system to transfer money. In addition, they pointed out that, at their discretion, money pulled in using their ACH system can be held for up to 60 days before I can withdraw it.

Funds deposited electronically may be withdrawn three (3) business days after settlement date. However, all electronic deposits are subject to review and may be restricted for 60 days.

If I sent them a check, the funds can be withdrawn in six business days; there are no further restrictions after six business days. If I use ACH, there could be restrictions for up to 60 days.

Transferring money

My current paycheck goes into the Fidelity mySmartCash account. I had setup the mySmartCash account a few years ago for its very good BillPay system and availability of market rate money market funds. But now that the market rate for money market funds is very low compared to online savings accounts, I have been pulling out any excess money and moving them to the savings account (I am using Alliant Credit Union’s savings account) whenever my paycheck is credited. (I know I know, I should update my direct deposit instructions…).

To transfer the money, I do not use Fidelity’s ACH system. Instead, I write a check against the mySmartCash account and deposit into one of Alliant CU’s network of ATMs. The result: I start earning interest on the day of deposit (say Thursday). The mySmartCash account is debited only on the following Monday.

Similarly, when I have money to transfer out from TD Ameritrade, I write a check against that account and deposit it into the Alliant’s network of ATMs. I no longer use TD Ameritrade’s ACH system.

Paying for taxes

To pay for state and federal taxes, I used checks instead of ACH. This gives me additional float of the funds before the debit.

Conclusion

On surface the ACH system is a very efficient means of money transfer, however because of its relatively lack of security for the bank “pulling” the money, many financial institutions have chosen to impose limits on these transactions. Some of the liability issues are discussed in the following post on BankDeals:

If a bank initiates an ACH credit to another bank, that ACH credit cannot be recalled. So if a bad guy somehow got into a Provident account and transferred all the money out, Provident would be liable to the account holder (assuming it was a consumer — not a business — account) and it would have no easy way to get the money back from the bank to which it was sent.

On the other hand, if another bank initiates an ACH debit from a Provident account, then NACHA rules allow Provident to reverse the transaction — no questions asked — for 60 days if they can produce a Written Statement Under Penalty of Perjury (WSUPP) from the account holder. They are under no obligation to investigate the legitimacy of the WSUPP.

Refinance Still In Progress

This is a short update about my refinance, which was started about one month ago. It is still in progress. The appraisal has been done, value came up to be OK but the credit union is swamped with applications.

According to the loan officer, they are currently processing applications submitted in the second week of September. They will reach my case some time near the end of this month. I asked about the rate lock expiry (60 days). The loan officer told me that they will honor the rate if they could not process the loan by the lock expiry date.

I sure hope she is correct.