Author Topic: refi -- what to pay attention to?  (Read 402 times)

bogart

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refi -- what to pay attention to?
« on: October 16, 2020, 06:41:09 PM »
Like many, we're contemplating refinancing our mortgage to lock in the new lower rates.  We're financed through PenFed but found working with them annoying enough when we bought our home that we're shopping around.  In comparing mortgages, what are the things to look for?  I know to keep an eye on points, closing costs, and avoid prepayment penalty.  Anything else? 

TIA.

Aegishjalmur

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Re: refi -- what to pay attention to?
« Reply #1 on: October 16, 2020, 08:31:14 PM »

Make sure for each bank and potential loan you get a loan estimate form. Banks are all required to use this form and format and provide it on every loan so if they can't or won't provide, don't use that lender. These will allow youan apples to apples comparision of the costs.
https://www.consumerfinance.gov/owning-a-home/loan-estimate/


You may also want to look at if the bank services their own loans. If they do not, what that means is that for the first few payments you'll make the check to Bank A, then they sell your loan and now it's to Loan Servicer A, who then might sell it to someone else. I've heard horror stories about having to fight with companies about having made a payment as it was received by the previous servicer after they had sold the loan, so should have gone to the new loan servicing company instead so the borrower had to arrange to get payment refunded and then make the payment again and negotiate with the servicer to avoid late fees.

Blazin

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Re: refi -- what to pay attention to?
« Reply #2 on: October 16, 2020, 09:14:37 PM »
We have always found that local credit unions offer the best rate, and lower closing costs.  We have never been required to escrow, which for us is a win.

SwordGuy

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Re: refi -- what to pay attention to?
« Reply #3 on: October 16, 2020, 10:30:20 PM »
Do not, repeat, DO NOT believe that the people who prepare the documents did the right thing.   Double check them.  Question all fees and charges up front and double-check they didn't add some or up the interest rate at the last minute.   

Do not, repeat, DO NOT believe that the documents say what you were told they say.  Read them.    Yes, they are long and boring.   Read them.   

Dave1442397

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Re: refi -- what to pay attention to?
« Reply #4 on: October 17, 2020, 01:48:03 PM »
Read the Yelp reviews for any mortgage company you're looking at. My mortgage got sold to Mr. Cooper (aka Nationstar), and I wouldn't trust them to do anything right.

https://www.yelp.com/biz/mr-cooper-coppell-5?sort_by=date_desc

bogart

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Re: refi -- what to pay attention to?
« Reply #5 on: October 17, 2020, 07:02:40 PM »
Thanks everyone!  @SwordGuy your post made me laugh -- any time we sit down to go over and sign legal papers on anything my DH always rolls his eyes and apologizes to whoever we're working with and says, "She's going to read all of these all the way through before she signs them."  Yes, yes I am.

Zamboni

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Re: refi -- what to pay attention to?
« Reply #6 on: October 17, 2020, 07:53:10 PM »
^Good for you!

Me too . . . reading every bit of those boring forms has saved me some trouble more than once.

SwordGuy

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Re: refi -- what to pay attention to?
« Reply #7 on: October 17, 2020, 07:59:23 PM »
Thanks everyone!  @SwordGuy your post made me laugh -- any time we sit down to go over and sign legal papers on anything my DH always rolls his eyes and apologizes to whoever we're working with and says, "She's going to read all of these all the way through before she signs them."  Yes, yes I am.

Good for you!

Solves all kinds of problems because sometimes the people who tell you what's in the document either lied to you or were just honestly wrong.   Things like, "What's the interest rate?" or "Can I pre-pay without penalty?" or "Is this loan callable?" or "How much is this loan for?".   Haven't seen them have the wrong property listed in the document (yet).

Whenever I'm selling a property it's not unusual for the buyer's closing attorney to gum up the HUD statement and assign me stuff that I'm not paying for.   Before I settled on my current lawyer (who gets stuff right!!!), it wasn't unusual for my buying attorney to let the lender slip in some fees, too.   

My last mortgage, last January, the lender (twice!) changed the terms of the agreement after we had the terms in writing.   If I weren't paying attention they would have nailed me for a goodly sum (if I let the mortgage go the full term instead of paying it off in a year).

You have to watch these folks like a hawk.   







clarkfan1979

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Re: refi -- what to pay attention to?
« Reply #8 on: October 18, 2020, 08:34:20 AM »
I have done about 4 regular mortgages for purchase and 5 re-fi's. My situation is complicated because I have 3 rentals. My advice to you is to not believe anything a loan officer says and read all of the paperwork.

When I bought my first house, I got a pre-qualification letter for a loan at 7%, but the market rate was 6%. After I got a house under contract, the mortgage broker was trying to tell me that I should sign with them at 7% because they provide better service. I had another broker try to talk me into a no-document loan at a 0.75% higher interest rate. There was no reason for a no-doc loan other than a higher commission for him. I was young with no previous experience in real estate. They could see it. They were like sharks with blood in the water. However, they didn't know that I am the type of person that does their due diligence.

When I bought my second house, a loan officer at the credit union took a very strong position that I didn't qualify because my debt to income was too high because I owned a rental. After some investigation by myself, she assumed that I did not report my rental income on my taxes. When I showed her my taxes she was surprised that I claimed rental income. "I guess you do qualify"

When I bought my 3rd home, I had a mortgage broker take a very strong position that I didn't qualify for traditional financing, so I needed to do an investment loan at 0.75% higher interest rate. He spoke for about a solid 20 minutes and wouldn't let me speak. At the end, I said that I have a pre-qualification letter from another lender that says that I do qualify for traditional financing. It was really awkward because at that point he realized that I knew my stuff and it was a waste of time to continue to spit bullshit.

When I bought my 4th home, I caught one broker doing a bait and switch. We both signed a good faith estimate with a rate lock. About 3 days later, he called me on the phone (which he never did) and said that he found me a better deal and will save me $1200. He then asked for my permission to cancel the original deal and draft up the new deal. I agreed over the phone without seeing the new deal. However, when I got the new deal, the rate was the same, but fees were higher. I asked him why the fees changed and how the new deal is $1200 cheaper. This is what he said, "The fees didn't change, but some of them were missing. I am not responsible for the original estimate because it was auto-populated by the program." He then proceeded to say something along the lines of, "If I am not willing to trust him, it's not going to work and I should shop for a mortgage with someone else." He never answered the question regarding how the new deal was $1200 cheaper, because it wasn't. It was actually $600 more expensive that went directly into his pocket. I was asking for a logical explanation. He wanted blind trust so he could take advantage of people. Once he realized he wouldn't be able to scam me, he cut ties with me and went looking for someone else.

Good luck.

cool7hand

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Re: refi -- what to pay attention to?
« Reply #9 on: October 18, 2020, 11:08:41 AM »
We echo the sentiment that credit unions are the place to start. They often have the best rates and treat you like a human being.