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My first PF post..my mortgage renewal story.

13 Apr

When we bought our house 5 years ago, we went to our bank and asked them to give us a mortgage. We thought if they were nice enough to give us this mortgage in the first place, we should just accept the interest rate they were offering and be happy. Five years later, and alot of personal finance articles read, I now realize this was not the best we could do. I subscribed to a personal finance magazine which had a lot of information in those 5 years about interest rates, mortgages and living debt free. When I first started taking an interest in my own personal finance, I would say to people, “I can’t wait to pay off my mortgage” and alot of the responses I received were along the lines of ” why bother, spend your money while your young”, “everyone has a mortgage, its just part of life”. I just felt that it didn’t have to be. And I didn’t want it to be. I don’t want to “OWE” the bank my house if something were to happen. I want to be able to look at my house and feel like its mine, not the banks, but mine.

So in the 5 years since we originally got our mortgage, I have learned alot. I’ve learned about interest rates and how much they add to the actual price of your house, fixed vs variable, negotiating interest rates, and how to pay down your mortgage quicker. I went to the bank around renegotiating time and asked them what their current interest rates were for our mortgage. She pulled out a piece of paper and read me the rates. I asked her if there was anything else she could do and she said “not really, those are our rates”. I left feeling a bit discouraged at my attempt, and also frustrated that I wasn’t being seen as a valued customer.

I started looking around on the internet at what other banks were currently offering and I very quickly realized that this bank had high interest rates for todays market. I continued my search and realized that this is a time when we have plenty of options and we have the power to go anywhere we need to. The bank we ended up switching to had a great deal on at the time of our renegotiation. We ended up with 1.3% lower interest rate right off the start. They were also offering a great promotion that if you switched your mortgage over to them, they would pay you 2% cash back. Great, I thought. I called and we got the process started. This is where things didn’t go as easily as it had if we had just stayed with our original bank.

The process of getting the mortgage written up ended up getting dragged out due to having someone clear accross the country doing the work. Phone calls couldn’t be immediately answered on their end, paper work got tied up in transit, adjusters were causing delays, the list goes on. I was finally encouraged by our local branch manager to file an official complaint online. I took her advice and I was never so suprised to get a phone call within 2 days inquiring about the delays and troubles. The branch manager also encouraged me to ask directly for compensation that I felt was appropriate. Bear in mind that 2 months had passed since my initial dealings and the date of my complaint. Interest rates in the meantime had taken a dive and if negotiating today, I knew I would be offered a lower rate. So I asked her for the rate as of today, not as previously negotiated. I also asked that all the legal fees be covered by the bank. I went one step further and requested that if they couldn’t get this process completed by my next mortgage payment, i would like them to pay the difference over and above what i would be paying had this been settled properly. Our mortgage had expired in the meantime with our previous lender, and it was sitting in an open mortgage at 7.45 % interest, so it was starting to cost me money to be switching with them. They came back at us agreeing to reimburse any legal fees and to lower the interest rate  by 0.1% to the current rate. They also agreed to cover the over interest we had been paying due to the open mortgage. When the deal was done we ended up with around $4000.00 in our bank account and an interest rate 1.36% lower than if we had stayed with our previous lender. I was very happy with those results and was very impressed with their customer service. This more than made up for the troubles.

While Im not 100% sure that we got the best interest rate that we could have, I do know that we did get a much better rate than I would have had I not took it into my own hands. For me, this was a big step and I learned some important things along the way.

  1. I learned that I am the only one who cares whether or not I am getting the best interest rates out there.
  2. I learned I don’t have to stay with any one institution just because I always have been with them. If they want my business, they will need to earn it in the future.
  3. I learned that if Im not satisfied with customer service, I can say that. I can ask for fair compensation for the trouble in a respectful manner and it may or not work out, but speaking up for yourself is better than letting someone take advantage of you.
  4. Most importantly, I have learned that my financial position and future is whatever I choose to make of it. I can be aggressive and choose to learn all I can about this subject or I can sit back and hope that someone else is caring about it for me. The latter is what I have been doing in the past but now I realize I have the power to make changes. Through the help of my new online PF community as well as magazines and articles, I will become educated and take charge of my financial future and work towards financial freedom.

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2 Responses to “My first PF post..my mortgage renewal story.”

  1. Cassie April 16, 2012 at 8:16 pm #

    Shoot, wrong form.

    I almost choked at the 7.45% mortgage rate, but then again I’m a product of the times and quite used to seeing really low rates. I’m glad you negotiated out of paying fees and having them pay the interest you were paying as a result of their delays. Did you put the $4000 back on the balance of the mortgage?

    • myjampackedlife April 17, 2012 at 5:16 am #

      It pains me to say no, but no, we didn’t. Had i not lost my job, definitely we would have but with the future so messy right now, I felt it best go into our emergency fund in case we need it. If we end up not using it though before I find another job, you can bet it will go there for sure.

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