I have always held banks in contempt, my experience of the past year has intensified this view. Last July I purchased a home at what I thought may be the bottom of the housing bust. Boy was I wrong. But the upside is that I have a job (at least as of the time of this blog entry) that I can afford this house. I paid $250K/6.75int/30 yr mtg, via an FHA loan which allowed 3% down. It also added an extra $110 a month to my payment which is currently a little over $2100/month.
I knew that my relationship with the banking industry was not going to be a pleasant one, but I greatly underestimated how ugly. Earlier this year I looked into refinancing my loan. At that time I could probably get my interest down to 5.00 percent. However since I have an FHA loan I would have to pay 1% of the loan value up front were I to refinance. Then there were the other various and sundry anal reemings also known as "Closing Costs". It would bottom line cost me around $7000 to refinance, which I could of course roll into the new mortgage. This would roll my loan back to the original loan amount of $250K. I just couldn't bring myself to lose an entire years worth of payments into a loan, no matter how much it would ultimately save me if I kept the house for more than 5 years.
Raising the loan amount would also lengthen the time that I would have to pay HUD insurance each month. Once the loan to value reaches 80% I could drop this insurance. However it looks like it will be a long time before my house is worth anywhere near $241K ( the current loan balance ). I have been looking at housing sales in my neighborhood. Houses much nicer than mine are going for tops around $230K, that's the asking price, I am sure they are actually selling for much less.
But I digress, lets get back to why I hate banks. Immediately, before even the first mortgage payment was due, Sovereign Bank sold my loan to Wells Fargo. I didn't choose Wells Fargo I wanted a local bank with branches near me so I could bitch to an actual person should the need arise. Anyway I set up semi-monthly automatic payments to Wells Fargo, since I got paid semi-monthly. I was in fact 1/2 of a mortgage payment ahead. Recently I decided that I would prefer to collect what little interest there was while my payment was sitting in Wells Fargo's bank and not mine.
Unfortunately, it took a while for me to get my first payment to them, I think because when I set up WF as a payee in my Bank of America Bill Pay accounts I entered the wrong address or BoA put the wrong address in automatically. BoA has many payess in it's address book already, however I will always go back and check what BoA has decided where my payment is going. So I was a few weeks late in my July Mortgage payment and I incurred a $47.00 late payment, boo hoo. No big deal. What I really freaked out about was the fact that Wells Farto (typo, not!) decided to put my last auto-payment from 6/15 and put towards a Principal Payment and not to my July payment, thus hastening my way towards a late fee. I then sent in over 3 grand to get caught up on July and pay Augusts payment. I then discovered they put the excess of the payment not for August but as another Principle Payment!! If I hadn't caught this and spent half an hour on the phone straightening it out I would have been late for August payment, KaChing! for WFarto to the tune of another $47.00! Plus I would still owe them another $2100 mortgage payment!!
So what have I learned, and this is a moral we are all learning in the wake of the "Bailout". Never give a bank more money then they are owed. They will invariably keep it and say where's the rest?
I have a 15 day grace period so I will be sending my September payment in the mail, by paper check, to the address printed on my paper statement on Sept. 1st. I think this is the only way I can insure that it will be put towards my monthly payment. And it will insure that I will be getting the interest on that payment up until it is due.
Never give banks anything it only encourages their bottomless greed!
