Looking for guidance with refinancing

iVillage Member
Registered: 07-24-2001
Looking for guidance with refinancing
17
Wed, 08-01-2012 - 1:51pm

This stuff makes me feel stupid . . .

Anyway . . . I'm looking for any insight anyone may have regarding refinancing my mortgage.

The situation is, I owe $81,500 with 22 years left on a 30 yr mortgage at 6%.

My bank is offering me a few options, but the one that seems to make the most sense is 2.875 for a 15 yr with closing costs of $650 out of pocket and $650 rolled into the mortgage.  This would mean we'd recoup the closing cost in approx 4 months (recouping in a short amount of time is important to me since I will be putting my home back on the market once the refiancing is complete - though I don't anticipate selling it yet this year given the market).

The monthly payments come out to approx $71 less a month (though I'm not really concerned about monthly payments and I will likely continue to pay what I have been paying each month - which is approx $150 more than the base payment.)

Does this make sense?

I'm a bit surprised at the high (relatively speaking) costs for closing.  They are asking for an assessment and inspection and telling me that Fannie Mae and Freddy Mac require it.  But I didn't think my mortgage was owned by either.  I bank with a small independent community bank, and I thought they owned my mortgage. (Are Freddie and Fannie just some sort of underwriting thing?)  My home will have no problem assessing higher than the mortgage amount and I've recently had a home inspection done on my own dime when I placed my house for sale.  It just seems silly to me.  I'm also working with a fairly young inexperienced loan officer.  Everytime I ask her a question she has to get back to me after she speaks to someone else who knows the answer.

I'm not really sure how to proceed.  I'm asking for a detail breakdown of closing costs and want to sit down and talk thru all costs line by line . . . but I'm getting the sense that this is irritating them, and they have been slow to get back to me.

I have excellent credit, have my mortgage, checking and savings with this bank.  Last year my H and I each opened a Roth IRA with them.  I'm thinking I deserve alittle more of their effort and time.  

Any ideas for me???

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iVillage Member
Registered: 10-28-2009
Wed, 08-01-2012 - 2:37pm

First & foremost - don't feel stupid!

You should be provided what is called a "Good Faith Estimate" and any loan offficer that is giving you a hard time at all, or not offering this upfront, is not someone I would choose to do business with. This GFE shows you in writing all the costs associated with financing your mortgage. There are many many costs.

The bank loaning the money will want an appraisal done by someone they do business with. It is not the same as a home inspection. A home inspection would go through and essentially look at the overall house and it's condition and working parts (or not). The appraisal is going to determine the value.

Taking into consideration the fact that you plan to sell your home sooner than later, personally, I would not go through the refinance process at this time. Even though you plan to recoup the out of pocket costs within a few months ( which is very important to consider), the overall benefit to refinancing will be lost.

If you do proceed, make sure that there is not a prepayment penalty. I would have a lawyer that works for you review this paperwork. I would also consider working with a loan officer that is more experienced.

I am not sure who holds your current mortgage, but in most cases the smaller banks sell off their mortgages within weeks, freeing up more money to loan out to new customers.

Hope this info helps. Keep us posted!

 

iVillage Member
Registered: 10-01-2008
Wed, 08-01-2012 - 3:13pm

As previously pointed out by Dollars, you will be furnished a good faith estimate.  BUT, this is not written in stone.  It is ONLY an estimate and things can change on the final documents.  I would ask for a supervisior and have a list of questions on note paper before I called for the answers.  Since it is a small bank, they may still service the loan, but the funds they use are Freddie/Fannie backed funds so therefore the rules are strict.

My opinion on the refi is different than Dollars.  Even though you "plan" on selling, you could actually end up staying there for quite some time.  2.875 is a heck of a lot better than 6%.  I'm currently at 6.875% and dying to refi.  Of course I am in Chapter 13 for 81 more weeks, so that's a big NO!  We have continued paying the mortgage outside of the plan and have NEVER made a late payment.  I even pay $16 extra every month.  Maybe in the next two years I can refi like you and still save some money.  My goal is to pay off in 10 yrs. or less. 

Good luck on the refi.  I would definately call and ask for a supervisor.  I use to close mortgage loans and some things vary from place to place, but not that much.  Those fees are all there for a purpose and someone should be able to tell you exactly what all of the fees are.

Norma


"Patience is the best remedy for every trouble"- Plautus


iVillage Member
Registered: 07-24-2001
Wed, 08-01-2012 - 6:14pm

Thank you both for your replies.

There is no prepayment penalities.  I've checked into that already.

You both make me feel better about pushing for more details.  Today I received another email from this loan officer and it only told me - yet again - the percentages they would offer me, and encouraged me to start the refi process as quickly as possible since the rates are subject to change.  I replied immediately saying I was still looking for some sort of estimated closing cost breakdown . . . and not surprisingly. . . no reply . . . again.

I understand that the assessment and home inspection are different things.  I do understand that if Freddy Mac or Fannie Mae have my mortgage, an assessment would be required.  How do I know who owns the mortgage?  If they have it inhouse, really a new assessment shouldn't be necessary, right?  My mortgage is significantly lower than what my house will assess at - according to several real estate agents I've spoken to and compared to the market comparison I had done last week.

The home inspection was done last year and it was done by an inspector this particular bank likes to use.  The inspector tells me he willl update the report at a minium cost.  Do you think it is reasonable to ask the bank to use this report?

I'm just kind of getting the idea that this bank is use to doing refi with people who aren't concerned about the detail whatsoever.  

Maybe it's me.  Maybe I'm over thinking this.

Obviously, I'm trying to keep my costs down.

 

 

 

iVillage Member
Registered: 03-15-2012
Wed, 08-01-2012 - 11:59pm

I used to work for a bank in the mortgage dept.   I don't know all the rules in US but  would question the need for an appraisal.  Do you know approx what percentage your mtg is to the value in your house?  We re-wrote out mtg last year and no appraisal was needed.  One, the loans officer could drive by our place and see the condition of it as compared to other homes, second we were in a newer neighborhood (about 6 years old) and third our house was worth significantly more than the value of the mortgage which lessens the risk (in the banks eyes).  Now with the economy the way it is or has been in the States the banks maybe more strict and if your mtg is owned by one of these other companies you may not have a choice but  it never hurts to ask.

 

Sandra

iVillage Member
Registered: 10-01-2008
Thu, 08-02-2012 - 12:38pm

No, you are not overthinking this at all.   You are being a SMART consumer! 

The last community bank I worked for was in 2002.  All banks have different rules.  This bank had two rules that applied to appraisals.  If the loan was a refinance and the appraisal in file was less than 2 yrs. old and you were at 80% of loan value, they would use the appraisal in file.  Their second option was for a home equity line.  All you had to have was your tax appraisal card from the county the property was in and it had to be under 80% of value. 

I can see with real estate values being so poor as compared to years ago why they would request a new appraisal.  You have to look at it from the banks point of view.  This IS their collateral on the note, so someone had better be sure the loan to value ratio is right or heads will roll.  A home value is not like looking up the NADA value in a book on a car.

I suggest that you "walk-in" the bank and sit down for a discussion.  You'll feel a lot better about the whole thing.  Besides, mortgages are not to be taking lightly.  It IS you home.  If you don't get the answers that make you feel comfortable, don't heistate to try someone else, even though gathering up all the information is a pain in the butt.  

 

GOOD LUCK  :smileyhappy:

 

 

Norma


"Patience is the best remedy for every trouble"- Plautus


Community Leader
Registered: 08-25-2006
Thu, 08-02-2012 - 1:32pm
I have only purchased one home and it was brand new, and refinanced once, so my knowledge is limited. So not much to really add as far as the details.

What did cross my mind though, is that they are probably not used to people caring about the details.

Yea, I would want to know what the refi is going to cost, but just like when you go to buy a car, they try to get you with a low monthly payment with no regard to the actual long-term cost. Maybe not the best comparison, but when I looked at getting another car a few months ago, they really do scratch their head when you refuse to borrow more than a certain amount, regardless of the monthly payment.

So again, I am guessing the bank deals mostly with people who just want the bottom line, and not so much detail. Regardless, it is a legally binding contract and you have every right to know where every penny is going.

Good luck!
Serenity
iVillage Member
Registered: 10-28-2009
Thu, 08-02-2012 - 2:37pm

I purchased my home in 2009, and needed an appraisal (obviously), I then refinanced in 2010 and needed a new appraisal. It was the mortgage company's policy to order an appraisal for every transaction, regardless of the date of the previous appraisal.

 

iVillage Member
Registered: 11-14-2008
Fri, 08-03-2012 - 10:31am

This sounds like a good idea to me. You are knocking years off your loan term too which gets rid of interest. Plus you don't know if you will be selling or not.  I say go for it.

Avatar for mahopac
iVillage Member
Registered: 07-24-1997
Fri, 08-03-2012 - 3:11pm

I just refinanced my home with the same credit union where I've been a member since 1979 and where I had my original mortgage in 2005 (30yr fixed @ 5.65%).  It was so darn difficult that I almost called it quits several times.  The only thing that made me stick it out was that I would save over $100K in interest, and it was obviously worth my time to try to avoid spending $100K if I don't have to.  Fortunately, I had a pretty good loan officer who was really patient with me even though I got so frustrated that one day I ended up yelling at him!  (Of course I apologized.) 

The rules for refinancing are much stricter now than they used to be, and Freddie Mac or Fannie Mae (I forget which) underwrites many of them, even if it is through your community bank.  THAT'S the reason they made me jump through hoops.  As assessment and inspection were absolutely required, but they were the least of my worries.  They wanted me to close my HELOC (which is open though has had zero balance for 6 years, and is what I'd use in place of an e-fund if I were completely desperate, so I did NOT want to close it).  The worst part was that I'm self-employed, so even though I make 5x what I made when I took out my first mortgage, they wanted endless documentation.  Everything I provided, they'd ask for more.  After months of this, they suddenly said they wouldn't approve it!  I called the loan officer, who told me this was a Fannie Mae issue, and he gave me the contact info for the head of mortgage loans at the credit union.  I emailed him, and within an hour, the whole thing was approved and I had a closing date.  I guess Fannie Mae has requirements but the credit union could actually apply some common sense to the whole thing.

Now, as for the bank's documentation, the first thing I got was a form that guaranteed the loan rate of 3.125% for 90 days from the date I called to apply.  Once that was signed, then the paperwork started coming fast and furious:  all the state and federal papers that have to be signed before you can close on the house.  I don't think I got a document listing the closing costs until after I'd signed those, though they did give me a general idea upfront.  There is a document that lists them, but that came toward the end of the process.  I had to make them apply my tax escrow (they wanted me to basically escrow the next year's taxes of $10K even though I had just paid them a few weeks before).  I had to pay 1/2 a point for some dumb reason, but what's $750 compared to a savings of $100K?  On and on and on. . .

So you're not stupid and you're not alone.  If I were you, though, I might call the bank and request a different loan office who can be more helpful. 

 

iVillage Member
Registered: 07-24-2001
Mon, 08-06-2012 - 1:55pm

I want to thank everyone for their replies.  They were VERY helpful to me.

Stupid of stupid things . . .  while I was STILL waiting for my loan officer to get back to me (even if it was just to tell me that it would take her a few days to get the info I needed . . . for her to tell me ANYTHING . . . geezee), I looked at my bank accounts online (to make sure H's payroll posted), AND my savings account was IN THE NEGATIVE.  What the hell!!  I called the bank asap, and the first person I talked to was just so annoying.  She just kept telling me that I probably had an auto deduct I forgot about.  Yeah, right . . . an auto deduct for some $3800 that I FORGOT about.  

Anyway, it was really (understandably) the last straw.

As I said, I live in a small town and it's a small town bank, so I ended up calling a member of the bank board (who I know well) and he was VERY UNHAPPY about what I told him.

Anyway, now I have the closing cost breakdown in hand, and my savings account is back to normal, AND the bank president told me he'd personally oversee my refi.

We'll see how this goes, I guess.

Why do these stupid things happen to meeeeeeee?

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