Refinancing, We Did It, Have You?

There are times when it is wise to refinance...and for some of us, the time has come, and may be leaving very quickly. Last year, we had to do a major, expensive, and necessary repair on our home. This lead to borrowing a significant amount of money on a Prime Equity Loan that we had as a backup in case of emergencies. We have an excellent credit rating, so have been sitting at 2.75% interest rate on the ADJUSTABLE home equity loan, and were at 6.125% on the balance of our first mortgage.

When the rates got down to 4.50% we realized that the timing was right to refinance. Even though our adjustable rate was low, with the instability in everything financial, we wanted the relative stability of a conventional loan.

Except for a few minor hitches along the way, the process went fairly smoothly, and we are finished. Here are a few things that we learned in the process.

• There's a good chance we could have saved money if we had worked directly with a bank rather than a "middle-man" broker, but I don't really regret it, because they did find us the rate that we wanted for the time period we wanted, I'm not knowledgeable enough to know how to go about that.
• We are only paying a little more a month for both mortgages than we did for one mortgage, and since we're not "just starting out" in life, set the loan for 15 years.
  
• As soon as possible we are going to switch to a bi-weekly payment plan, which means we pay exactly 1/2 of the monthly mortgage payment every other week. This ends up saving you lots of interest plus gets our loan paid off in approximately 12 years or less as opposed to 15 years because there are extra weeks in a month that we will be making payments that we wouldn't have with the traditional monthly payment plan.
  
• When you get your mortgage, you get 2 figures for you annual percentage rate (APR), one is the one that the mortgage company tells you you'll pay, the other is that plus the extra fees that you will be paying for your mortgage, so when you are comparing mortgage companies and want to save on the extra costs, look at that second number, not the one used to advertise the loan.
• You can put your fees and points right back into your mortgage so you don't have to lay them out up front. Of course this means you'll be paying interest on them, but if you don't have the cash, this is an option.
• You can get cash back to use for - whatever - when you refinance. We decided not to do that though it's always tempting, but will enjoy the escrows that our former mortgage company has been holding (we have the mortgage company handle paying our taxes and homeowners insurance...hence the escrows) and will be returning to us instead...plus the fact that there's approximately 1-2 months between the time that you close and the time you start paying your new mortgage...extra money to stash away, buy something fun that you've wanted, and to use to catch up on a few bills...we did all three.
  

In spite of a few things that we could have done better, we're pleased with our rate, and within a week of closing, have been watching the rates climb again.

Have you refinanced? If you have any tips to share, please do in a comment!