Mortgage Rates And Refinancing

by Marjorie
(USA)

Ask Kate: Mortgage Rates And Refinancing Kate, I am in the process of refinancing my house. I only wish I had read your website prior to going to the bank. I would have know what questions to ask.

I am writing you because I read the post by "Catherine from Wilmington" and find myself in a similar situation. With mortgage rates changing so quickly, I think banks are pushing to lock you in before they lose money to a lower interest rate.

I am refinancing a mortgage and consolidating it with a home equity loan for a total of $250,000.00. My fault for not asking enough questions and being afraid of what the rates would do, I foolishly locked in at 4.55 percent and made a $1000 good faith deposit to my bank, the same bank I have dealt with for the last 25 years.

Marjorie's Dismay Over Mortgage Rates And Refinancing

To my dismay, the fixed rate at my bank is now 4.15 percent. I asked several times about getting the lower rate even willing to reapply and lose my good faith money. At first I was told to be happy with the rate I got.

As I pushed for what the penalty would be to me if I backed out of this process and reapplied, I was told the penalty would be over $4700 to the bank for not following through on their commitment. But do you think for one minute a loan officer would not let me reapply if the rates had gone up?

I feel that I am being pressured to just "go with the flow". Being told to refinance if the rates go way down again does not help me justify the closing costs I would incur for refinancing in the future. My settlement is scheduled for this coming Tuesday and I am so annoyed by the bank's attitude that I am ready to say forget it and go elsewhere.

My fear is that the bank would bill me for their $4700 penalty change. Does that happen? Can they force me to follow through with this? I feel like I am being bullied and I do not like it. It is very cavalier of the loan officer to say, it is only $50 but for many parents that is a lot of money each month.

What is your opinion? Marjorie

Kate Answers: Mortgage Rates And Refinancing

Dear Marjorie, For refinancing, asking questions is the key. So I am glad you discovered Get Your Best Mortgage Rate.

First of all, read back through your paperwork, especially the Rate Lock Agreement. You may find a float-down procedure for times of rapidly decreasing interest rates, one the bank has forgotten about. (It happens.) The refinancing disclosures are not the most exciting read but you will feel more in control if you take an hour to peruse them.

Then I recommend to return to the bank on Monday and take your paperwork with you. Ask for the mortgage department's supervisor. Perhaps your loan rep is inexperienced. I don't know. But regardless, you do not deserve to feel left in the dark and you do deserve answers.

Here are some questions to ask the manager.

1 -- What arrangements can we make for me to take advantage of the current interest rates?

2 -- If I forfeited my $1000 deposit, would your bank re-lock my mortgage rate at today's lower interest rate? (Look for a similar provision in the rate lock agreement)

3 -- In lieu of forfeiting my deposit, will your bank meet me halfway and re-lock my rate at 4.3 percent? (Look for this also in your rate lock agreement)

4 -- I have been told that your bank incurs a $4700 penalty if I do not complete my refinance. Wouldn't it be beneficial to the bank to work out a satisfactory deal for both parties as opposed to the bank losing $4700 AND a life-time customer if I cancel my refinance?

Marjorie, as far as the bank passing on this "$4700 penalty", I have never heard of such a practice. But as I don't know your state laws, I can't say for sure. If this is a concern of yours, you could ask the manager point blank.

Continue asking more questions until you are satisfied. You are the customer and I am sure the bank values your business.

I hope you'll come back to my website Get Your Best Mortgage Rate again in the future. So remember to bookmark Get Your Best Mortgage Rate to your favorites and visit often for up to date tips for buying a house, mortgage news and refinancing advice.

You can also invite friends to comment on this page or create a page of their own like you did.

Best Wishes,

Finding The Help You Need For Locking Rates

My Interest Rate Lock Guarantee - Help for timing your rate lock.

The best solution to avoiding hidden fees is to ask the right questions before you lock mortgage rates.

All about getting mortgage broker fees in writing - Otherwise your rate lock is meaningless!

How good is a mortgage interest rate lock guarantee? In the end, you have to read your lender's paperwork.

Because Yield Spread Premium is a common reason for losing your rate lock, here is the insider scoop on this odd sounding term.

Questions to Ask BEFORE You Lock

Ask Kate about locking - Ask a question and get an answer from Kate.

Search Readers' questions and Kate's answers at Mortgage Rate Lock Center

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