Progress to Date

  • Original Loan Amount: $204,000.00
  • Balance at Beginning of 5-year Goal (1/1/08): $188,983.82 @ 6.00%
  • Balance at Refinance in February 2009: $148,000.00 @ 4.625%
  • Outstanding Balance: $0.00 (PAID IN FULL!!!)
  • Latest Payment Date: April 2011
  • Latest Additional Principal Amount: $17,623.22
  • Amount Ahead of Schedule (since refinance): $121,462
  • Time Ahead of Schedule (since refinance): 7 years 10 months
  • Interest Saved Last Month: $23,972.48
  • Total Interest Saved: $28,435.55 ($1,037.74 on original mortgage; $27,397.81 on current mortgage)
  • Months Remaining in 5-year Goal: 20
  • Average Monthly Principal Needed to Meet Goal: N/A (Goal achieved)
  • Progress List Explained

Saturday, March 28, 2009

"Convenience" Fees and Bicycle Maintenance

One of the questions I asked when initiating the refinance process was whether our new lender offered an online payment feature on their website. I was told they do. While this is true, I was disappointed to learn that they charge an $11 "Convenience Fee" for this service (for each transaction!). I complained about this to Customer Service, who explained that the new lender contracts with a third-party service to facilitate the electronic transfers, and that the lender doesn't profit from those fees.

I don't entirely believe this. I'm surprised that the fee would be so high, given that most major financial institutions allow for direct debit (aka electronic funds transfer, or EFT) free of charge. I pay some bills this way. Our old lender offered the service for free as well. If the new lender is truly not profiting in any way from those fees, then in my opinion they have made a poor choice of selecting a reasonably priced third-party service. If I was to submit 12 payments a year via the online payment feature, that would be an annual cost of $132! So instead, I'll just mail payment by check. This isn't my favorite approach, since there is always a lag time involved, and the chance that checks get processed incorrectly, or lost in the mail. But since postage is currently less than 50 cents per letter, I'll take advantage of the savings and monitor our account to ensure that funds get applied correctly.

I was also going to look into the option of online billpay. My only concern is that I don't know if my allocation instructions for extra principal would be received by the lender (even if I add them as a note on the transaction). If the lender doesn't receive specific instructions to apply extra funds to the principal balance, then they automatically apply them to the next regular payment on the schedule (which includes both principal and interest). That would do nothing to help us achieve our goal.

Meanwhile, my bicycle is all tuned up and ready for riding in 2009. I have learned how to make some adjustments myself, like fine-tuning the braking and shifting systems, aligning the headset (handlebars), cleaning and lubing the chain, and so on. But I wanted to have the wheels trued (made perfectly circular), which is a task that is beyond my current abilities. A colleague at work knows a guy who has worked as a bicycle service technician and manager for the past 15 years, who is now trying to start his own shop. Because of this, he charges less than the large bicycle store in town, and was able to complete the work in one day (the shop wanted 2-3 weeks). If anyone needs good bicycle service in southern New Hampshire, let me know and I'll send you his info.

I'm looking forward to cycling to work this year. Monday I'll resume the commute by human power. It's about time!

Monday, March 2, 2009

Monthly Summary: February 2009

This summary won't be in the same format as prior entries because we are currently transitioning between two loans.

We paid a total of $725.06 interest to the two lenders in February, but we did not pay down any principal. In fact, the balance of the new loan is greater than the old mortgage. This is because (1) the new lender based the loan preparation documents on an old mortgage statement, and (2) the closing costs
($1,700) for the new mortgage ended up being included in the overall loan amount. Neither of these was what I wanted, but in the end it was convenient because we didn't have to come up with certified funds for closing. I'll just make a large payment in March on the new mortgage to cover two months of extra principal contributions. We'll pay a little more interest next month than we would have otherwise, but I can live with it, especially given the benefit we'll receive from interest savings in the long term due to the lower rate.

At the close of our original mortgage, our balance was around $145,062. If we hadn't made extra payments to the principal, we'd be sitting on a debt of over $178,900. Because of this, our cumulative interest savings since December 2007 were over $1,000. That's real money.

We still have 46 months left to meet our original five-year goal. We'll need to pay an average of $3,217.39 each month to meet that challenge. This number rose substantially this month, but will drop back down again after the March payment is complete.