As you know from my previous blog entries, I needed to refinance a $80,000 mortgage taking out about $20,000 to paydown a balance on a 2nd - a $100,000 mortgage. After meeting with several lenders last week, I met with Bank of America on Monday for an introductory meeting. The meeting convinced me to take the next step and so yesterday (Wed, August 29,2007) I turned in the necessary paperwork.

This consisted of the uniform mortgage application, tax statements and authorization to pull my credit score from the credit bureau. The Uniform Mortgage Application essentially asks you to create a personal balance sheet. This is something that most businesses have but most people do not. It is a very useful exercise in determining your net worth. Many authors such as Robert Kiyosaki and others stress the importance of being able to keep on top of this. But I digress - the important thing is to list your assets. Your credit report will list all your liabilities, but you need to be able to list your assets. Do not forget items such as your car, stocks, IRAs, retirement accounts, any personal debts owed to you, all real estate you own, and of course all cash accounts.

Today (Thursday, August 30, 2007) the agent was able to confirm some of the quotes she gave me earlier. I was a bit nervous, similar to receiving grades after finals - you think you are in good shape but you never know. She told me that we had excellent credit scores - 790, 794 and 819. The advice posted at: http://bestpickhomeloans.com/How-To-Improve-Your-Credit-Score paid for! As such we qualified for the best rates.

A few minor changes to what we initially discussed the closing costs would be $1700 instead of $1650 and I would have to pay $33 to buy down the rate to 6.25% for the 15 year fixed. So really the only change was an increase of $83 which is almost nothing, I certainly didn't feel like I was in a bait and switch situation. Based on the research I had already done, I knew that both the costs and also the rates were very competitive. I decided that it made sense to lock down the rates today.

This was not a easy decision and several thoughts went through my head. I asked the agent, well what if rates go down in the weeks it takes to close the rate, can I get the lower rate. The answer was no - which is fair - since a loan lock prevents an increase it should also prevent a decrease.

I also thought well what if the Fed lowers rates and all mortgage rates go down, should I just wait??? A fundamental lesson in investments that I have learned is that it is very difficult to time markets in which you have no insight - and even then it is there is a high degree of chance. The thing that I knew with certainty was that Citibank was going to start charging me 7.75% come September and the longer I waited the more I would pay. Better to take the 1.5% reduction now.

So I instructed my agent to lock the rate. I asked her to send me something in writing - so she emailed me the offer and said she would mail the Good Faith Estimate after it came out of the system. I also gave her my credit card on which she would charge $200 for the processing fee. This fee is part of the $1700 closing costs and in the event the loan is denied this money is refunded.

Stay tuned for buyers remorse...