Mortgage Refinance Options: The Evasive Run Around

by Stacy G. from Weston, WI and by Doug R. from Prescott, AZ

Ask Kate when your mortgage refinance options begin to fade away: With a credit score of 802, you wouldn't think Stacy could have such a difficult time refinancing to a lower interest rate and shorter term. But here she is asking how to avoid evasive lenders. And speaking of evasive, Doug isn't sure he'll get an honest answer from his loan specialist.



Feeling trapped, he wants an honest answer opposed to Bank of America's vagueness toward cash payments for distressed homeowners who opt for deed-in-lieu of foreclosure.

My Best Mortgage Refinance Options

By Stacy G. from Weston, WI
My Best Mortgage Refinance Options

Kate,

I have been talking to two banks, my current lender, TCF Bank, and US Bank.

Both gave me hope in a lower interest rate and I want a shorter term. I would like a 20 year low rate fixed loan.

I currently have a rate of 5.5%. I have an 802 credit score and my husband has 786. We are current on our loan, never defaulted on any payments. I was told I could get a rate of 3.625% from US Bank.

Then because our home's value fell from $132,400 to $113,000 according to US Bank's appraisal, I no longer qualify for that rate unless I bring $14,000 to closing. So they offered a 25 term at 4.125% but I think I still need to bring $3000 to closing.

TCF said I could get a 20 term at 4.25% fixed but we have to do another appraisal. If it comes in low, I will need to pay PMI. This makes my payment not affordable.

I now owe US Bank $435 for the appraisal yet have no loan. They refunded the $395 application fee but are charging me for the appraisal the bank ordered. I am not happy with that appraisal due to the fact the appraiser did not take in to account the $30,000 of renovations we have done. His appraisal also states there are not true comparable properties to go off of.

Would a HARP loan help or will I get the same run around?

Ask Kate at Get-Your-Best-Mortgage-Rate.com
Ask Kate answers: My Best Mortgage Refinance Options

Hi Stacy,

Sorry to hear you are having such a tough time lowering your monthly payment.

I have three ideas regarding your situation:
  • Is the bank or borrower responsible to pay the appraiser?

  • Who is eligible for a HARP refinance?

  • Are there alternatives to refinancing for a quicker principal balance pay-off?

Appraisal Fee Disclosure

I am happy to hear the bank is not charging you for the application fee. But paying for an appraisal stings, especially when the value of your home ultimately stands in the way of your refinance.

I hope the bank explained clearly to you, prior to ordering it, that you'd be responsible for the appraisal bill, regardless of the outcome in your value. In the future, this is a question that should be clarified up-front. Most states require a written disclosure asking the borrower to acknowledge payment will be due, regardless of the outcome of the refinance.

If you did not agree upfront to pay for the appraisal, a call to a manager is in order. Perhaps they will waive the fee or partially reduce it.
It's a given that you want the best mortgage rates and competitive closing costs. But how do you eliminate unpleasant surprises during the loan process? By asking questions! Here's a list of questions you might not think to ask when you're shopping for a lender... Take the Easy Path to Low Mortgage Payments.

HARP Refinance Eligibility

The HARP refinance through Making Home Affordable is intended to rescue homeowners who can't refinance due to fallen values. But many assume their home must be underwater to take advantage of the program.

Actually, the guidelines state that a borrower must have less than 20% equity to be eligible to apply.
Go here to learn more about qualifying for HARP... New HARP Loan 2 Announcement.

How to Accelerate Your Mortgage Pay-Off

It can be a gut-wrenching experience for homeowners to lose the promise of lower payments or early pay-off when their refinance gets denied. But sometimes, it has turned out to be a blessing in disguise, especially when the express purpose of the refinance was to accelerate mortgage pay-off.

A while ago, I wrote a book, The Mortgage Freedom Project, explaining how to pay off debt, including a mortgage, without changing your lifestyle. It all has to do with that funny sounding word... amortization.

In my book, you'll learn how you can beat the bank at their own game, pay off your debt, and own your house free-and-clear without paying the closing costs of a refinance. Good luck!
Go here to read more about dumping the bank at The Mortgage Freedom Project.
All the best,

Ask Kate

Evasive BofA and Deed-in-Lieu of Foreclosure

By Doug R. from Prescott, AZ
Evasive BofA and Deed-in-Lieu of Foreclosure

Kate,

We've tried unsuccessfully to modify our interest-only mortgage for 2 years (3 applications) with BofA.

We feel trapped with only being able to deal with BofA.

We do NOT have to qualify for a future home; thus, we're considering a deed-in-lieu of foreclosure.

BofA (on their website) says $3000 plus $8500 (debt relief) can be available FOR THOSE LOANS THAT QUALIFY.

What is the criterion to qualify? I don't feel I will get an honest answer if I call the BofA specialist (877-430-3411). They have all the data for hardship and now we have an extra $18000 for dental. I want to know if this money is real before I go through more paperwork.

The home is a primary residence and purchased before 2009.

Ask Kate at Get-Your-Best-Mortgage-Rate.com
Ask Kate answers: Evasive BofA and Deed-in-Lieu of Foreclosure

Hi Doug,

It's discouraging, that in spite of government regulations, lending institutions, after requiring borrowers to spill their guts, cannot be relied upon to shoot straight with a homeowner who is in danger of losing a house.

In general terms, Bank of America (BofA) states when a homeowner cannot afford the monthly house payment neither can qualify for a loan modification, they could be eligible for a deed-in-lieu of foreclosure. Eligibility is also dependent upon a financial hardship and the attempt to first sell the property.

Cash Payments for Deed-in-Lieu of Foreclosure

The cash payment of $3000 to cover relocation expense is contingent upon the type of loan that you currently have, as is an additional $8500 cash payment to pay off debts.

I have known a lender to cover thousands upon thousands in medical bills after they determined a distressed homeowner was terminally ill. But will they come through for you? There's no way to know for sure unless you complete the paperwork and work your way through the deed-in-lieu of foreclosure process.

For specific help, I suggest you read these questions from several homeowners in similar situations as yours. Hopefully, this will help you learn how to negotiate with a slippery lender.
  1. Deed-in-Lieu of Foreclosure - Mortgage Crisis Not Over

  2. Ask Kate about Deed in Lieu of Foreclosure

  3. Negotiating the Deed-in-Lieu of Foreclosure
Wishing you the very best,

Ask Kate

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