Thursday, September 24, 2009

Hooray to Local Banks!

A few months ago, we decided it is wise to take advantage of current low interest rates and refinance. We thought we would save a lot of money by reducing the total mortgage interest we will have to pay over the remaining mortgage life.

During our pre-bank visit research, we found out that small local banks give much more favorable rates than larger, well-known banks. After much discussion, two local banks were picked for visit: Liberty Bank and Harris Bank. I want to take this opportunity to share how impressed we were with the sincerity and honesty of their service.

At the Liberty Bank, a young banker welcomed us into his office. As I have believed wisdom comes with aging, I didn't expect much from the young man. However, he spent almost an hour to explain and answer our questions. He was sincere and he did not try to 'sell' stuff. We were given a free mortgage 101 lesson. At the end of the visit, CJ and I found out that Liberty Bank does not offer commission to its bankers for selling products, which explained why the young man was able to be fair and honest with us.

Next, we visited Harris Bank. The morgage banker, Kevin, was not in the office. However, instead of telling us to come back later, another banker went an extra mile to let us talk to Kevin over the phone. Kevin was straightforward: He said, "Why are you going to waste that $1200 refinancing cost? You'd better use it to pay toward your remaining mortgage balance. Even though your mortgage rate goes up next year, it will be a minimal increase." He could not have been wiser! Refinancing cost is 100% wasted money. However, if we put it toward our mortgage principle, it will reduce the balance and therefore reduce the interest. With our current mortgage balance and mortgage interest rate, $1200 is greater than the money we will save on interest payment by refinancing.

The first banker helped us understand the basics of mortgage and refinancing. However, Kevin's insight was what the first banker at the Liberty Bank could not offer to us. If we had talked to only the first banker, we might have gone ahead with refinancing by now! Whew....Praise God!

Without consultation, plans are frustrated, but with many counselors they succeed. (Proverbs 15:22, NASB)

Where there is no guidance the people fall, but in abundance of counselors there is victory. (Proverbs 11:14, NASB)