Should I Refinance My Home But Switch Lenders

by Debbie in Palm Harbor, FL and by Sally in New Albany, IN

Ask Kate if you should refinance your home but switch mortgage lenders: Both Debbie and Sally are refinancing their homes. Both feel they aren't getting straight answers from their loan originators. Both feel pushed to close their transactions quickly. Hey! This is NO way to refinance a mortgage!


Stale-Dated Good Faith Estimate and No Written Lock Agreement

By Debbie in Palm Harbor, FL
Stale-Dated Good Faith Estimate and No Written Lock Agreement

Kate,

We put our refinance on hold for five months with Pioneer Mortgage Funding because we were not sure if we wanted to go conventional or HARP.

Three weeks ago, I gave him the okay we would go ahead with the HARP.

Since then, he sent me a summary of a Good Faith Estimate but not the actual GFE. So I said the loan is on hold until we received the GFE.

The date of the GFE that we have is from 5 months ago, the interest rate is 3.25 percent, and the lock was for 15 days.

I don't think this GFE is still valid.

He is now telling me my interest rate will discontinue in a couple of weeks, but we have no proof of that on paper with a new GFE.

He keeps asking for our new bank statements. Why? In the past we gave him all the information needed for our loan, we have excellent credit, late on nothing, and are refinancing our mortgage only want to lower our interest rate. We have plenty of equity in our home.

I am starting to feel uncomfortable about our process.

Ask Kate at Get-Your-Best-Mortgage-Rate.com
Ask Kate answers: Stale-Dated Good Faith Estimate and No Written Lock Agreement

Hi Debbie,

Yep, who wouldn't feel uncomfortable when treated like this!

Refinancing is an intense process, can rapidly turn expensive, and affects the affordability of your home, possibly your largest asset.

WHY entrust your loan application to someone who does not spark confidence?

Written Good Faith Estimate and Rate Lock Agreement vs Verbal Assertion

What's wrong with this picture you've described?

Keep Loan Documentation Current for Your Refinance

Asking for new bank statements is the only part of this scenario that I agree with. Documentation such as paystubs and bank statements becomes out-of-date quite quickly. Better to update now than endure a panic at the closing table.

But this leads me to ask why the mortgage originator understands that your financial documentation is stale-dated but not your Good Faith Estimate and Mortgage Rate Lock Agreement. Hmmm...
Go here before shopping for a lender: How to Compare HARP Mortgages and Avoid Borrower Remorse.
Best wishes,

Ask Kate

Feeling Pushed to Close HARP Refinance

By Sally in New Albany, IN
Feeling Pushed to Close HARP Refinance

Kate-

Super confused and need your expertise.

In refi process right now.

I have a Fannie Mae loan that qualifies for HARP refi, but I'm not upside down, have a 68% LTV, or so I've been informed through a FNMA property valuation notice.

My lender wants me to keep going with the HARP refi but the standard 15 Year Fixed refi has at least a .3 lower rate. However, it means additional closing expenses and an actual appraisal.

How does the FNMA Property Valuation reflect true value vs. an actual appraisal?

My lock expires in 2 days, being pushed to close ASAP but I'm thinking rates may go down more. What would you do?

FYI, my FICO is 720, I have 20 years left on my original 30 Year Fixed at 5.7 percent.

Ask Kate at Get-Your-Best-Mortgage-Rate.com
Ask Kate answers: Feeling Pushed to Close HARP Refinance

Hi Sally,

Making Home Affordable's HARP refinance program is for homeowners with a minimum loan-to-value of 80 percent and no limit on the maximum loan-to-value.

But you've been told you have 35 percent equity which would put you at a 65 percent loan-to-value. So, ask your loan originator how your mortgage is still eligible for HARP. Hopefully there is a reasonable explanation. But I recommend double-checking.
Go here for more help on loan-to-value ratios: Can Higher-Than-Expected Appraised Value Decrease Locked Mortgage Rate.

Fannie Mae Automated Property Valuation (AVM)

Next, Fannie Mae's Automated Property Valuation (AVM) comes from a computer program that estimates the property's worth based on a wide range of data, including comparable sales. Although AVMs do not offer the advantage of judgement calls by a skilled and experienced appraiser, they are quick to generate and less expensive.

So which is more accurate? A market appraisal, which is still only one person's opinion of your home's value on a given day, or an AVM? I imagine the accuracy varies from transaction to transaction.

Close Today vs Timing the Market for Lower Rates

Only you can make the decision to close your mortgage transaction ASAP or wait out the market for lower rates.

But before you decide to postpone closing, ask yourself if you're capable of determining when the market is at its lowest. I do warn against setting an arbitrary rate and stubbornly holding out for it. Along this line, read my Mortgage Rate Lock Guarantee.

Additionally, ask your loan originator for a written disclosure that details the consequences of allowing a rate to expire. Make sure the disclosure answers the rate lock questions found at Low Mortgage Payments: Question Your Way to Success.

Assess the Cost of Your Mortgage Refi

If you are not comfortable closing because you feel you are being pushed, take a moment to reassess the cost of your refinance. You don't want to be pushed into an expensive transaction and end up paying too much for your mortgage. Best wishes,

Ask Kate

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Is My Good Faith Estimate Invalid?
by: Debbie from Palm Harbor, FL

Hi everyone, Kate here. This is a follow up from Debbie. I answered her questions, one by one, as seen in italics.

Debbie: Page 1: 4. You must lock interest rate at least (n/a) days before settlement? What does that mean?

Kate: In order to get the legal documents prepared and allow time for the 3 day right of rescission required by Congress, rates need to be locked a reasonable amount of time before closing. It's a matter of logistics. But it does not appear the lender filled in the number of days. You have the right to ask why.

Debbie: All other questions above is 15 day lock 3/16/2015, GFE available, and settlement charges may change after 3/23/2015. Page 3: 10. This amount is ($9.5694) per day for 11 days if settlement is 10/22/2014.

Is this another invalid GFE?

Kate: Well, the 2014 date doesn't make sense. It could be sloppiness, I guess. Again, you have the right to ask for a correction. Important: Make sure your final loan documents also have correct dates.

Debbie: On our GFE, the new loan amount is $106,000. The balance due before new loan is $101,300. The difference is $4,700.

Adjusted Origination charges $2112.58
Settlement Services $2105.26
Together, these two charges equal $4217.84.

New loan amount should read: $105.517.84
The amount between $106,000 and $105,517 is $483.

On the first form (Fees Worksheet) he sent us, it reads Total estimated funds to you is $904.74.

In a conversation, I asked him why we were getting these funds back. His reply was in case you need them at closing and just to round up the amount.

Kate: Some lenders require loan amounts be rounded up to the nearest $50 or $100. But $900?

Debbie: But the math does not add up. $106.000 minus 105.717 is $283. If you're rounding up, it does not equal $904. Where are the extra funds going?

I was never asked if we wanted to round up our loan amount, he just did it. My answer would have been no. If we needed extra funds and knew what the costs were before closing, we would have brought a check to cover costs.

I asked the question again: His reply is THE $106,000 ARE THE CALCULATIONS OF THE CLOSING COST PLUS YOUR PAYOFF ROUNDED UP.

Is this amount an extra fee added on?

One more note (origination charge was $2385.00). We are receiving a credit for $272.42 for the interest rate of 3.250, credit reduces our settlement charges.

Is he trying to make up for this credit, the math does not add up!

Kate: Ask to see your pay-off. Many lenders send them directly to borrowers. I wish they all did.

Add up loan fees, prorated property taxes, prorated homeowners insurance, new escrow reserves, prorated interest on the new loan, the payoff of the old loan including prorated interest. Then add the estimated cash back. It should equal your new loan amount.

It requires expertise and a lot of care to get a refinance closed without over or under shooting the amount since a payoff changes on a daily basis. But $900 is a big gap. And yes, you should have been asked if you wanted cash back.

Lastly, ask when your next payment is due and if you are receiving back the existing escrow account or if it is rolled into the pay-off. All borrowers are entitled to an explanation of these very important details.


Thank you for your time and consideration on this matter.
God bless
Debbie

Good luck, Debbie and let me know your progress. Kate

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