VA Home Loan Refinance Nightmare

by Jack from Haverhill, Massachusetts USA

Jack tells about his VA home loan refinance nightmare that went from mishap to mishap over the course of more than 3 months: Kate, tell your viewers to allow plenty of time for getting a mortgage. My nightmare! First let me say I am not your average customer since I help my friends save money by sending them to one of two companies that have great fees associated with their mortgage rates and points.



Jack continues... Plus I was a loan originator.

Last year, to the day, I closed on a 15 year loan. It didn't close on time but the rate and fees were honored.

VA Home Loan Refinance Nightmare
This time, wow! VA nightmare! I applied 4/26/2012. Then I locked 05/14/2012. They had all documents sent to them FED EX. Now the wait.

In late July, I was asked to provide them with 5 more items. One was the name of my nearest relative. Wow, you couldn't ask me in May?

Since I am a veteran, they wanted to know my deployment status. Wow, I am 63 years old! I served in Vietnam. My days of active duty are over.

Then I had to get and pay for a termite inspection, even though my condo association monitors the grounds with a system in the ground. I had a termite inspection on my unit that lasted 5 minutes at a cost of $175. This was done 2 days before closing, I thought.

I was told my funding fee was 2.15%. I had to tell them it was 3.3%. I was right. I was giving them an additional 5% of the appraised value to lower my funding fee to 1.5%, only to find out at the last minute it only applied to purchases.

Last but not least, we closed on July 27 or so I thought. We signed papers only to find out that the papers were dated July 27, 2011!

Then we found out that settlement or escrow fees can't be charged if an origination fee is charged.

The mortgage company or attorney closed on July 31. A total of 3 HUDs were done. (Note from Kate: A HUD is a statement itemizing mortgage closing costs.)

After the July 31st closing, I got a call from the title company saying I was short $400. But this mistake was because because my wife wrote $1404.88 IN the block but when she wrote it out long ways, she wrote One thousand four dollars 88 over 100. I sent them a check for $400 and problem solved.

There were a couple of other things that went wrong but I told you enough. The lawyer loved it because he got paid twice.

From start to finish...
  • 4/26/2012 to 7/31/2012

  • Locked 05/14/2012

  • 78 days later closed
P.S. I paid 1/8 point to lock for 45 days. I got a 78 day lock for the same money. By the way, the loan didn't fund until 08/08/2012.

Great company but not so great at VA home loan refinancing.

Have a nice day, Jack

Kate Answers: VA Home Loan Refinance Nightmare

Ask Kate at Get-Your-Best-Mortgage-Rate.com
Dear Jack,

If it weren't so serious, the comedy of errors might be humorous. But there is nothing funny for any mortgage borrower about such unprofessional behavior.

Thank you for sharing your story, a nightmare indeed. It serves as a cautionary tale for anyone who will soon be shopping for a bank.

More information about shopping for a mortgage company and loan originator can be found at How to Compare Mortgage Rates and Loan Originators in Six Steps. You will also find the link to the Nationwide Mortgage Licensing System Consumer Access with free information about companies or individuals authorized to conduct mortgage business in a particular state.

Best wishes and thanks for sharing your experience,

Ask Kate

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Comments for VA Home Loan Refinance Nightmare.

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This is a response to "confused" (see comment below)
by: Jack from Haverhill

First of all, let me say that rate locks are funny. 30 day rate locks are usually at no cost to the borrower. 45 day, 60 day, and especially 90 day locks come at a price. If you think your lender is giving you a 90 day lock for free, think again! He will give you a higher interest to cover his risk.

The shorter the rate lock, the cheaper the loan will cost you. If I had a lender that would complete the loan in less than 15 days, I would take a 15 day lock.

Second you could consider floating your rate and locking within 15 days of estimated closing date. That also comes with risks since you will be subject to what rates are that day or what the lender says they are. If your lender is honest and you have been tracking the data, you will know how many basis points they have moved.

Most important thing to do: Get a lender you can trust.

My advise is if you like what you see and you like the costs associated with that rate, then lock it! Locking at application is a good idea when the data and the rate movements aren't making too much sense. Also sometimes it's better to lock and know where you stand then to float and wonder what if. Can you afford a spike up in rates? If it's going to be tight paying the mortgage, then lock! Know your risk tolerance!

Lastly, when rates are up, applications are down which means the lenders can process the loans more quickly.

Finally 4 more things:
1. 90 day locks are not customary.
2. My nightmare was that rates were falling but I was locked and I wanted to jump ship. But I didn't.
3. My lender honored my rate because rates were down.
4. Rate locks are a commitment for both the lender and borrower.

confused
by: Anonymous

I'm confused...why did this borrower pay for a 45 day rate lock on a refinance? Is it not customary to automatically rate lock for 90 days (at no cost to the borrower) for refinancing? Something smells fishy there.

And the loan closed in just over 90 days. Frankly, that is hardly a "nightmare". Six months...now that would be a nightmare. Even then, if the lender's processing dept is the issue the lender would cover the rate lock extension costs. Providing updated documents for those that expired is a small price to pay.

Hi, Kate here...

What's fishy about being dissatisfied over a termite inspection 2 days before closing, stale dated closing papers, multiple closing statements, and a VA Funding Fee increase? I'd think this would cause most people to be disgruntled. They might not completely understand the process but they can tell when their loan is being tossed together.

Why should borrowers be content with mishap after mishap in the name of "paying a small price?" They are already paying a huge price to refinance.

Jack deserved better and so do other borrowers!

Sincerely, Kate

P.S. Lock policies vary greatly among lending companies. Never assume there's a standard policy before locking. Read the mortgage rate lock agreement fine print. Don't walk away without a written and signed copy.

P.P.S. And remember this also. A home is not only an immense financial investment, it is the emotional center of most households. No wonder the process felt like a nightmare to Jack.

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