Category Archive: Banking

Refinancing Our Mortgage

In an effort to both save money on interest and lower our monthly mortgage payment, we have decided to consider refinancing our mortgage.  I have spoken with several lenders and it looks like we can refinance our loan – and reduce or interest rate by more than a full percentage point.

When we purchased our home nearly two years ago, rates were already very low (historically speaking).  We happy with our rate and figured that we would just stick with it, pay off our mortgage as quickly as possible, and be happy.  However, since that time, rates have continued to drop – and are now at the point where, even if we have to pay a little in closing costs, the savings, over the life of the loan, will be rather substantial.

We are still crunching the numbers, trying to decide if we want to go back to a 15-year mortgage – or move to an even lower rate, on a 10-year.  More than likely, we’ll go with the 15-year.  With the rate reduction, even if we were to take the entire 15-year period to pay the loan off, we would still pay less interest than we would if we stayed with our current mortgage, and paid it off in 13 years.

Combining the lower rate with our aggressive payments, we should be able to hit our goal of owning our house – in less than 10 years.

I’ll let you guys know how the process is going, when and if we decide to move forward.  Right now, all sings point to “yes”.

 

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Automated And It Feels So Good

I’ve always resisted fully automating our finances.  Recently, however, I’ve had a change of heart.  Now, not only are most of our monthly bills paid online, but I’ve also automated deposits for savings, and payments towards our mortgage.

We have a power bill, a telephone bill, a satellite bill, and a cellphone bill.  Each of these is delivered electronically, via email.  The only “paper” bill that we receive is the one from our local water department.  With online and instant access to our accounts, it’s extremely easy to pay bills, check current balances, and keep things organized.  As the bills arrive in my inbox, I look them over, make sure that everything looks to be in order, and make payments via online bill pay.

Our bank allows us to not only pay bills via bill pay, but to receive them as well.  I recently used this service to automate the payment of our various automobile and life insurance payments.  Using this e-bill service, I never have to worry about stamps, envelopes, late fees, or due dates.  The bill arrives and it gets paid.  I also have the option to delay payment for a few days, so that I can review a particular invoice or bill.

I’ve even automated, through the bank’s bill pay feature, weekly payments for various services, like child care and kids’ gymnastics.  The checks are mailed directly and I never have to worry about remembering the checkbook.

Our cash reserves, somewhat depleted by the recent home purchase, are being rebuilt, one automated weekly deposit at a time.  Each week, a fixed amount is withdrawn from our primary checking and deposited, automatically, into our online savings account.  This “set it – and forget it” system really is a great way to rebuild savings.

The payments and deposits are all controlled by me, via online banking.  In other words, I haven’t given “pull” authority to any of the companies with which I do business.  My payments aren’t automatically deducted – but they are automatically sent.  I can cancel them, review them, or change them, any time I want.  I am in control.

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Roth IRA Deposit Gone Awry

I have just gotten off of the phone after the better part of an hour.   I can’t be sure, but I think I’ve fixed a problem, that until today, I never knew existed.

The background -

I have a Roth IRA.  My wife has a Roth IRA.  One of my goals for 2009, is to fully-fund both Roth IRAs.  We have a joint checking account.  From time to time, I will send a payment (deposit) from our checking account to the brokerage where we have our Roth IRAs.  Clear enough?  Good.

The problem -

Last week, I logged in to my checking account, and initiated two payments (deposits), one for my Roth, one for my wife’s Roth.

Today, when checking on the status of said payments, I was shocked to find that the deposit intended for my wife’s Roth IRA was rejected.

Apparently, when my bank sends a payment to another company, the only name on the payment check is my name, even though the checking account is a joint account.  Well, when the brokerage received the payment, and noticed that my wife’s name was not on the check, they rejected the check, because they do not accept third-party payments.

The solution -

I called my brokerage, and they suggested that I send a copy of a recent bank statement, along with my wife’s name and account information, showing that she is, indeed, a joint holder of the checking account.  This sounded like a lot of work, and I’m just not in the mood for a lot of work.

I then called my bank, pressed zero fifty times, talked to a very nice CSR, and had him add my wife’s name to all future online bill payment checks.  Problem, hopefully, solved.

I also canceled the payment to the brokerage, the one for my wife’s Roth IRA.  Once the money, which has already been deducted from my checking account, is safely back in the account, I’ll initiate another payment.  Hopefully, this one will have my wife’s name on it, and all will go smoothly.

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Goodbye Citigroup, Hello Wells Fargo?

Well, well.  Just a few days ago, it was announced that Citigroup was going to buy my bank, Wachovia.  Now, however, it looks like Wells Fargo will be buying Wachovia, not Citigroup.

As a customer, the following quote from Yahoo Finance makes me feel a little better about the new deal –

While Wells Fargo has logged three straight quarters of profit declines, the bank has been weathering one of the nation’s worst credit crises much better than most of its competitors, in part because it had less exposure to the subprime mortgages whose failure undermined the financial sector. (This quote has been removed from the original Yahoo Finance article.  See note at the bottom of this post.)

As a tax payer, it’s great to see that this deal will go through without government funding or FDIC funding.  Again, from Yahoo Finance –

The Citigroup deal would have been done with the help of the Federal Deposit Insurance Corp., but the Wells Fargo deal for Wachovia will be done without it. (This quote has been removed from the original Yahoo Finance article.  See note at the bottom of this post.)

This might not be the end of the Wachovia saga, but I feel much better than I did a few days ago.

Edit – Not one minute after I wrote this post, the information from Yahoo Finance changed.  It looks like Citigroup is upset about this deal and is claiming that it has an exclusive agreement with Wachovia.  Stay tuned.

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