In late January of 2012, I had a strong suspicion I was going to engineer my layoff in the coming months. I had worked at my company for 11 years and I was looking forward to doing something on my own. As a result, I knew I had to do as much as possible to lower my expenses before taking the leap of faith.
One of my biggest recurring expenses is my mortgage. Even though my initial mortgage rate from eight years ago has dropped from 5.75% down to 2.625%, spending thousands of dollars a month is still a lot of money for someone who no longer has W2 income. Every dollar of interest savings counts!
When the 10-year treasury yield dropped to 1.85%, I gave my bank a ring to see what they could do. Amazingly, they came back with a 5/1 ARM rate of 2.625% with “no cost no cash” outlay. The process started around January 27, 2012 and didn’t end until early May, 2012, 100 days later!
At the end of April (day ~80), the bank asked me AGAIN for my latest two paychecks. I clearly remember thinking to myself, Thank goodness I still have a job! I told my bankers that it was likely I would no longer have a W2 income stream come summer just to be completely up front. They thanked me for my honesty and pushed my refinance through because they said we cannot predict the future. We have a 11 year relationship and I don’t plan on defaulting on my mortgage anyway.