Friday, May 15, 2009

Money is the root of all . . .

. . . additions. In case you haven’t heard, the banks are getting a bit pickier about to whom they lend. For that reason, we didn’t get our loan from a bank, we got it from a credit union. Other than the spelling, I’m not entirely sure what the difference is, but I do know that they gave us a pretty good rate. Unfortunately, since we were refinancing with a different bank than the original, they needed a new appraisal. We figured, “Big deal, the tax assessment is $150,000 more than we need for the refi, what could go wrong?” This is what can go wrong: They send out an appraiser who is two months out of junior college and you get under appraised. This caused our loan to be more than 80% of the value of the house which ended up costing us about $2,000 in points. It's kind of a tough conversation to have with your loan officer:

Loan Officer: "We need 2,000 more dollars"
Us: "So, just so I understand the situation: Your appraiser, who we paid $600, grossly under appraised our house, and now we owe you an additional $2000?"
LO: "Yes"
Us: "Oh, I see now, that seems fair. Do we at least get a better rate for the $2,000?"
LO: "No"
Us: "Of course not, that would be silly."

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