Monday, June 3, 2013

The Finance Industry Makes No Sense

We recently refinanced our house. After doing so, something very profound occurred to me.

The finance industry makes zero sense.

I know what you're all thinking, "But every loan I've gotten has gone through a fully logical process."

I'm sure you've experienced loads of logic. Good for you. Thanks for rubbing it in.

Let me tell you my story, and then you can judge for yourself. I should tell you, this recent refinance was actually the best process we've been through thus far. But that doesn't mean that it was logical, by any means, or that it all made sense.

For the most part it was pretty straight forward. They wanted to know things like how much money we made, how much the house appraised for, what our credit scores were. These things all make sense. They are actually relevant to loaning us money with a house as collateral.

But then, fairly quickly, logic went out the window.

They wanted a copy of my mortgage statement. I sent them a copy of the mortgage on the house I was refinancing. I got a call from the loan guy the next day, "I see that you sent us your statement, but it looks like we're missing the statement on your rental property."

Oh, sorry, I thought I was only supposed to send you things that are relevant to the house we're actually refinancing. My mistake. Would you also like a copy of my grocery list?

Then later, I get an email. "Why does your W2 have a different address than your primary address? Please send us a signed and dated letter with the explanation."

I wrote them this winner: "To whom it may concern, My employer has an old address. Love, Jeff"

Okay, maybe that was the first draft. I might have revised it just a little to remove the sarcasm.

After several more rounds of giving them more information than anyone could possibly want to know about me, we finally signed.  Oh happy day!  We're going to save 200 bucks a month!  Woot!

Then they told me I would be getting a check in the mail.

Most people would be excited.  Yes!  Free money!

What most people don't realize is that it's not free money.  It's money that I just borrowed for 30 years.  Why would I ever want to borrow 2000 dollars with a 30 year term.  That doesn't even make sense?  I figured out this check adds 7 dollars to my monthly payment, and will cost $3500 to pay back over the entire term of the loan.

I recognize I can just pay it back into the loan, and not pay interest on it for 30 years.  But I find myself wondering why they loaned me 2000 dollars more than they needed to.  You'd think someone at the bank would have been good enough at math to make the numbers add up.

Of course, there are worse things in life than getting a 2000 dollar check.  When we originally bought this same house we had to take pictures of the 2 kitchens in our rental (because the kitchens in an entirely different property were very relevant apparently), we had to write a letter explaining why I had deposited a check for 100 dollars from my parents (because no other family on the planet says stuff like, "I'll buy this, you can pay me back later."), we even had to write a letter explaining that we had received a tax return, (I'm sure they'd never seen anything that strange and unusual.)

So, I'm not really complaining about the check.  I understand it could be much worse.  But, in an industry so filled with numbers, is it too much to ask that there be a little bit of logic, and perhaps, even a dash of mathematics?


  1. I'm with you. Buying my house was the biggest pain, but I think it's like that for everybody. My theory is that they want it to be so incredibly annoying that even if you got stuck with a lame interest rate that you won't want to go through it all again to refinance. You totally showed them!

  2. You’re right it makes no sense! I especially hate it when you are taking out a loan, or refinancing how you have no privacy. They want to know everything! How much money do you make a year? How much does your family makes a year? How much do you have in savings? Is anybody giving you money? Do you have money buried out in the back yard? If yes how much, and what are the GPS coordinates for it? I totally understand where you’re coming from.


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