Refinancing My Mortgage
by KS from Tampa, Florida USA
Ask Kate: Refinancing My Mortgage Hi Kate, I came across your website while googling on refinance. Your website is very informative. Wonder if you could advise me on refinancing my mortgage. I want to lock mortgage rates at more than one bank.
I have a current mortgage with Bank #1. I applied to refinance with Bank #2 taking advantage of low interest rates.
They took the preliminary application over the phone and told me the rate is locked at 4.5% with funds at closing $2500, which would be rolled into the loan. Today I received paperwork from Bank #2 stating the rate is 4.5% but funds at closing would be $4900.
The mortgage application further states Bank #2 requires the signed documents by 3 days and "if your interest rate expires, you may not apply for a new interest rate until 90 days after your current rate lock expires".
I am a little confused as to what this means. Am I bound to Bank #2 now? Do I have to absolutely submit the signed mortgage application to them? What if I did not?
Bank #1 has just made me an offer of 4.25% with funds at closing $4000. Can I lock the rate with Bank #1 instead? I would rather proceed with them now.
Wonder if you can throw some light on refinancing my mortgage. Regards, KS
Kate Answers: Refinancing My Mortgage
Hi KS, Your simple question - "I want to lock mortgage rates at more than one bank. Now what?" is getting a complex answer because bank #2 may not be as bad as you think!
For example, the discrepancy in closing costs needs an analytical eye. But before I continue, please understand as I don't have Bank #2's documents in front of me, I am going off generalities. So I will pose questions with the hope that you can find answers in their paperwork. OK, let's break it down.
Does the difference between $2500 and $4900 come from non-recurring or recurring closing costs? If the increase is due to property taxes, homeowners insurance and prepaid interest, will you receive a refund of existing tax and insurance accounts and/or a month or so without a house payment offsetting the $2400 difference?
Refinancing My Mortgage - Understanding The GFE
Learn how to understand a good faith estimate at Mortgage Closing Costs
for best refinancing results.
Did you deposit initial funds with Bank #2 in order to apply or lock your mortgage rate? You will want to ask under what circumstances a deposit is refundable upon cancellation of a mortgage application.
Did Bank #2 order your credit report? If you reapply with Bank #1, keep in mind additional credit inquiries could have a detrimental affect on your scores.
Read that document again, the one that says, "if your interest rate expires, you may not apply for a new interest rate until 90 days after your current rate lock expires". I'm pretty sure you will find it refers to locking another rate at Bank #2.
However if both banks are connected in any manner, having locked at Bank #2 could hamper your attempts at a better rate and closing costs through Bank #1.
All mortgage transactions, over the phone, via the internet, face to face must be in writing. I understand the challenges associated with this. Go to How To Lock Mortgage Rates And Avoid Hidden Fees
for a solution.
Refinancing My Mortgage - More Help
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