Mortgage Renegotiation Follow-Up

As I posted a couple days ago in Should I Renegotiate My Mortgage, I was going to see about consolidating our first mortgage with CitiMortgage and our CitiFinancial credit card that financed the central air install a few months ago. So, I called CitiMortgage (C) yesterday to see if they would be willing to handle this. While they can't simply roll in the amount to our balance and update the payments, he did offer me a refinance deal.

Because of our standing as good clients (yep, we actually pay our mortgage on time every month, or, this month twice!), the offered us first a streamline refinance with no closing costs or fees. Basically, they just reduce our rate from 7.125% down to 6.25%. A pretty sweet deal I must say. However, we need to roll the central air money into the mortgage before the end of May in order to avoid finance charges (it was 1 year no payments no interest). For that, we will have to do a full refinance with closing costs and all that good stuff.

The total refinance would bring our 2 mortgage up to about 95% loan to value. That's a big no-no in today's market no matter your credit. But, since CitiMortgage is the first lien holder, they are mainly concerned about not having more than 80% of the value on their mortgage, which this refinance will still do for them. They plugged in my estimated home value and new income and we were approved in about 4 hours. It's just a matter of paperwork and they will finish everything up, including paying off the CitiFinancial card for us. This refinance comes with the 6.25% they offered before and no points.

There will be a $445 application fee to move forward, which kind of stinks. They also estimate about $4k in closing costs and pre-paids which they will roll into the balance. That's good, because we can't afford to pay those at the moment. It's strange though because they will make me fund a new escrow account and then we will get our current escrow account refunded to us later. What a scam.

All in all though, I think it will be a good deal for us. We will be rolling in 16k of debt plus the 4k in closing and pre-paids. With the drop in the interest rate on the mortgage, our monthly payment will be increasing by $27! That's nothing. I had budgeted for it to go up over $100 when we did all this, so that's really good news. It will take a big headache off of us going into the new year having it done. The skipped payment that comes with a refinance will also give us the cash to pay sales tax when we buy a new car next year.