We bought our home in 2006, for $242,000 – not a whole lot considering we live right in the middle of Philadelphia and New York City. At that time, similar houses in Mercer County, NJ were going for over $325,000 so when we found a home that we liked in our price range in Bucks County, PA we jumped on it!
Less than 6 months later, the real estate market collapsed, and our home was worth under $190,000. It was heartbreaking, and scary. Many families in the surrounding communities lost their homes to foreclosure. People were struggling to refinance because they were now “under water” owing more to their mortgage company than their home was even worth.
Over the next few years, we contemplated refinancing our home, and when the HARP refi programs were announced, we thought this would be our chance to have our mortgage re-evaluated. That was in 2011. We went through our (then) mortgage company, Nationstar, and jumped through their hoops. We paid out a lot of money for the inspections and appraisals that they required, and 3 weeks into the process were told that we were denied for our refinance because… wait for it … our home wasn’t worth what was owed!
We were devastated. We went into this whole process knowing that our home was now worth less than what we still owed, and that is why we wanted to refi! We were told that was the whole basis of HARP – to help people who were underwater on their mortgages. Instead, we didn’t refi, our mortgage payment stayed exactly the same, and we were left with over $1000 in credit card bills that had been used to jump through their hoops.
Fast forward to this past summer, we are at a birthday party for a friends’ son, and we start chatting mortgages and refi with a group of our friends. My friend John told us that he & his wife, Aimee, refinanced and didn’t need to bring anything to the table. This had my interest, but I was still a skeptic after being burned 3 years ago. John gave me the phone number for his guy, and said we should give him a call.
I held onto that phone number for over 2 months before I finally made the call one afternoon. I spoke to Matt Derby from New Penn Financial, and he assured me that we could work together on a refi for our home. He asked what our financial goals were – lowering our interest rate, paying our mortgage off sooner, or paying less per month – and genuinely cared and listened.
Over the next week, there was a lot of back & forth with paperwork, phone calls, and emails. Everything was very straight forward. Our goal was to lower our monthly payments so that we would have more money each month to pay down college loans and credit cards while allowing us to build our savings.
Two weeks from the initial phone call, we were sitting around a table closing on our refinance. Not only did we not have to bring any money to the table (closing costs), but we didn’t pay anything in the process leading up to settlement either. No inspections. No appraisals. Nada. In fact, we left settlement with the knowledge that our next mortgage payment wouldn’t be due until October, so we had our September payment to do with as we please (we put it into upgrades around the house). In fact, a few weeks later, we even received a check back for $180 that we had over paid.
Here we are 6 months later, and the only thing I wish we had changed was refinancing sooner. We are now saving about $500 a month on our mortgage payment, which has allowed us to pay cash for birthdays and holidays, build our emergency fund, and pay down our college loan debt and credit cards.