refinancing headache, help?!

[aly]

I'm hoping someone here might have some words of wisdom. I'm driving myself nuts. My BF is absolutely no help, so I'm turning to you wonderful women to see if anyone can help put my mind to rest here.

I'm doing an FHA streamline refinance on my house. I first went to a guy recommended by a friend and found that he was a little shady for my taste. Then I went to a refinance company listed on the HUD website. He gave me a rate and a payment. I was good with it and got the ball rolling. Then, I second guessed myself and called my bank. They gave me a slightly better rate and payment. They said I would have to bring in some cash, then later changed and said no. I went back to the company and he said, I was going to surprise you with extra cash back, but instead, I can get you the lower rate however, you have to increase your insurance (meaning a little more money).

In the end, it looks like the bank is a little better, but I can't be certain. I have to pay about $200 to the company and will have a total payment (including ins/taxes etc) that is about $30 higher. With the bank, I shouldn't have to change anything, and "probably" won't have to pay anything. Initially, the woman who took my sapplication info said I would need to bring in about $2000. Now, my loan officer says probably not, if anything it will be minimal. Unfortunately, everything is just estimated in all the paperwork for both places. I hope this makes some sense. It all makes me feel completely stressed.

Does anyone have any experience with all this? Is there any reason to chose one over the other besides payment? Is there anything in particular I should look for on the forms? I think I'm just stressing because I feel as though I'm screwing the company who has already done work on the file. I also feel pretty vulnerable. Any advice would be great...

$30 isn't much, but could add up to a beautiful new bike over time!

[Trek420]

Well first some questions and maybe some answers? why the refi? If you are in an ARM I would say (though not a professional and no professional training and do not rely on me for financial advice because I'm flat broke so it's like getting diet advice from the chubby gal or speed and power tips from the slow chickie and blah blah blah) that you refinance NOW whether your monthly payment is a little less or the same or even more. Because if you are in an ARM at any moment your rate can/may/will :eek: skyrocket at any moment.

So now's the time. Do it now, rates are low, the govt. has programs to assist.

If you're in an ARM and can document your income DO IT!!! :cool: If you're in an ARM and can not document income, well, I have no idea what you should do. ;)

If you are in a traditional 30 year fixed as I was taught by my Dad (who also was not a professional, no professional training although in a related field blah blah blah) any time you can get a loan 2% or more lower than what you pay now ..... go for it. :cool: That's almost always worth it.

Are you planning to stay a while or looking to sell? Duh, reading the OP it looks like you're staying a bit ($30.00 x number of payments to = nice bike :p)

If you're fixed and staying it may be good to refi now. If you think you can/will sell soon then can't make that decision for you.

I worked with an excellent gal at Wells Fargo and at my Credit Union. Both showed me that although I could lower my rate by almost 2% from 6% to 4.something by the time fees, appraisals, this and that is tacked on my payment I would not have to bring any cash in, both offered to roll the fees in with the loan as they are my bank but I would only be a little lower.

I decided to pass on the paperwork at this time. I'll probably sell in 2 years anyway. Anyone want a newly remodeled bikeable condo in Hayweird, CA? :p ;) :D

I dunno who you are working with but since Wells is in CA, so's my credit union gal if you want their numbers PM me.

[indysteel]

First, read this:http://www.federalreserve.gov/pubs/refinancings/default.htm

From there, I'd ask (or demand) that both the bank and broker provide you with their bottom lines in terms of interest rate, monthly payment, closing costs, any fees that are rolled into the loan and any extra costs (like more insurance or points) to get the rate or payment they're quoting you. If they're unwilling to give you firm figures, tell them it was nice doing business with them and move on to another lender.

[Biciclista]

If you have been satisfied with your bank up to now, if their numbers seem good to you, stay with them. the new lender might be a can of worms.

[aly]

Thanks! More info- I have an FHA loan, my interest rate is fixed at 6.125 right now. I've only been here about a year, so refinancing will only extend my payments for a little while beyond where I already am (I don't think I'll be here 30 years, but will be here for a least 5 -20 more) and it will lower the rate to 5%. I'm also already upside down (which sucks). The new financing is special for FHA loans and doesn't require equity, appraisals, etc. I've looked into and it is a legitimate program backed by the government. My payments would lower about $150-200 each month. It doesn't seem that I would have to put in more than a couple of hundred with either place (if anything).

The bank I'm dealing with is actually Wells Fargo and they've been great so far. I'm just always afraid of getting taken advantage of or making a horrible decision. I don't have any family to help with this sort of thing and most of my friends seem about as clueless as I.

[Trek420]

If your property taxes are part of your mortgage you may be able to lower your payments is by requesting that your property taxes be reviewed. You do not have to pay anyone to do that so do not fall for any offers you get in the mail to lower your property taxes, those are scams :mad:

Just check the website of your friendly local county property tax folks. :cool:

I sent the form in and they said "sorry, we don't think your condo's value is down". Dude, similar units are going for less than half my original price and I bought LOW, thought I got an amazing deal at the time. Oh well, they did go on to say it'll be automatically reviewed again in July.

[ny biker]

I refinanced late last year to convert an ARM into a FRM, and had to go with an FHA loan because my loan to value ratio was over 90%.

The most important things I learned were: read all the documents very carefully, ask questions about anything you don't understand, and make sure they fix any errors in the paperwork. I found some important errors in the loan app which the loan officer filled out. Also, I had to stay on top of them every step of the way - even when I told them that certain forms had been sent to them, either by me or my condo association, they would call me weeks later to ask why they hadn't gotten the forms yet.

BTW, I was able to deduct the prepaid mortgage insurance premium on my tax return for 2008. My accountant told me the deduction was a new, temporary thing. I don't know how long "temporary" is, but I definitely will ask her next year if I can deduct my MI payments for 2009. The premiums are deductible for a refi if the new loan balance is the same as the old loan balance, e.g., you're converting from an ARM to a FRM and not cashing out equity.

I refinanced with the bank that had bought my old mortgage last summer, and they immediately turned around and sold the new loan to Countrywide. I must say, I have been very impressed with Countrywide's customer service so far. I've had to call them twice with questions, and they were extremently helpful and friendly both times. Like they actually cared if I was happy. It was refreshing.

[aly]

Thanks for all the responses, nice to see I'm not the only one who had had to deal with this stuff. It seems that LA county is currently reviewing my house (and all others bought in the last 2 years) for tax adjustments. I'm keeping my fingers crossed. I'll find out in July. I didn't even think of the fact that I'll get the same upfront MIP deduction for the new loan that I did last year for the original loan. I love the affect my house had on my taxes.

One of my biggest complaints with the company I was dealing with was that there were errors in the application. He just kept saying that "things would be fixed in the final document" and that "these are estimates." It gets frustrating. It bothers me that both places have said that they can't give me final numbers until the docs return from the underwriters. This means no finals until closing. How am I supposed to compare without the actual numbers?

Part of my problem is that I'm a hard-wired people pleaser and I feel like I owe the guy I have been working with even though I know that it's all business. I just think I might feel better going with Wells Fargo.

[Tuckervill]

Separate out the property taxes question from the refinancing question. You can have your property taxes reviewed any time.

The rule of thumb for refi is if you can get 2% or more reduction in your current interest rate, AND you are going to stay in your house for 5 or more years, do it. (This is presuming you want to eventually pay the mortgage off--some people don't care.) There are costs involved, and you want to stay in the house long enough to make up the difference in cash outlay.

As for the two companies you're dealing with--they do have to give you a good faith estimate of all closing costs, and your interest and payment, etc., but I've never seen one that was even close to the actual numbers until five minutes before the closing! Since you're doing the special program, I would think they should be able to pin it down a little better ahead of time. If you don't mind financing a couple grand in closing costs for 30 years, go ahead and allow them to roll them into the loan. Since my goal is to pay as little interest as possible, I'd rather pay it up front.

Anyone who said they are making decisions for you, getting a little cash out, whatever, I would run away from screaming. I'd say go with the bank, not the mortgage broker.

Karen

[aly]

By the way, Trek, I'm in the same situation with my house. I bought last year at 35% lower than peak. It felt like a great deal. Now, zillow says it has dropped almost another 15%. Who knows how accurate zillow is, but it still messes with you a little psychologically. I just keep reminding myself that I have an excellent house and bought when it was right for me. Also, I'm sure the value will eventually return.. it will, right?

I got those scam letters. It reads like such a great service. Luckily, I also work for the county and received a scam warning from them. It's so unsettling. I hate always having to worry about being taken for a ride.

[sundial]

Aly, your avatar--LOL! :D

[aly]

They're why I had to buy the silly house in the first place. They convinced me they each their own bedroom;). Completely spoiled!:D

[Trek420]

By the way, Trek, I'm in the same situation with my house. I bought last year at 35% lower than peak. It felt like a great deal. Now, zillow says it has dropped almost another 15%. Who knows how accurate zillow is, but it still messes with you a little psychologically. I just keep reminding myself that I have an excellent house and bought when it was right for me. Also, I'm sure the value will eventually return.. it will, right?

Right, and meanwhile your home is a nice place to live and store your bikes.

Not to politicize this thread but I feel one small part of what got us in this mess is an attitude of homes being a quick rags to riches scheme. Buy the house, flip the house, repeat every two years till wealthy. What ever happened to buy the house, live in the house?


I got those scam letters. It reads like such a great service. Luckily, I also work for the county and received a scam warning from them. It's so unsettling. I hate always having to worry about being taken for a ride.

Luckily I'd read in the paper how negotiating a lower tax bill is an option for some and could lower your mortgage if included. The article specified how to do it, it's free, talk to your realtor because some will help you (mine did).

I feel badly that I'm sure many get taken for a ride on these scams. If it did not work the companies would not send out the mailers. :mad:

[Mr. Bloom]

aly, I'm in banking...but I'm not a residential mortgage person...and FHA is even a different animal within that world. But, here's my perspective as a consumer that has the banker's perspective:

+1 Tuckerville: The Good Faith Estimate is just that...what that means is they can't knowingly mislead you, but there are a lot of "unknowns" until all the information comes together...and that will be in the last hours before closing. My experience is that the Good Faith Estimate is usually accurate to within a few $ as long as there are no surprises like delinquent taxes, unknown credit problems, etc.

-1 Indysteel (although we count Indy as a dear friend;)) Althought Indy is 100% right, the fact is these are extraordinary times in the mortgage business right now. With all the refinancing happening, mortgage folks are really stretched thin (ours are working 15 hour days with no relief in sight)...and moving on to the next lender might cause delays that result in a higher rate as the market turns. Plus numerous credit inquiries affect your credit score and could affect your ability to qualify. Expect good service, don't expect perfection right now.

My advice as a consumer who's done this several times before:

estimated transaction costs (appraisal, title, attorney, etc) should be close from lender to lender. Look at the points, and APR to explain differences. These factors typically define the best deal. For instance, I'm putting a mortgage on one of our homes at 4.25% right now, but the APR is 4.57%...because I chose to pay "points" to get a better rate.
avoid mortgage brokers or small mortgage companies
focus on a reputable bank or a mortgage company that has been in business for a long time (check the Better Business Bureau on mortgage companies...look at the local newspapers "Readers Choice" awards)
deal with a mortgage originator (the person who takes your application)that's got years experience; newbies rarely can anticipate all the complex moving parts to deep insight
look the mortgage originator in the eye and say "what could go wrong with this estimate...what are the moving parts that could swing it one way or the other"


IF you have specific questions, feel free to PM me. I can always ask questions of our mortgage originators if I don't know the answer.

[aly]

Once again, I really appreciate everyone's advice. I was mentioning the help I got here to a friend who was shocked that I "got that much mortgage help on a cycling forum." It really is amazing, the wonderful people and the diverse knowledge you find here. You are all really special.

Right now, I'm thinking I'll go with my gut and stick with Wells Fargo. They're paperwork looks good, and the APR is slightly lower. There were just too many mistakes in the other mortgage company's paperwork. When I brought up the mistakes, he just dismissed it and blamed it on the new computer system. I also hated the fact that he claimed he was going to "surprise" me with the rebate on the loan. It also doesn't help that I've received a couple of solicitations from the same company in the mail. I figure, things have been fine with Wells Fargo for the last year and the paperwork looks good.

Now, I just have to tell him that I'm not going to finish the refinancing with him. Has he lost money helping me? The loan is with the underwriter and would be closing at the end of the month. Is there a best way to go about telling him?

[Trek420]

Is there a best way to go about telling him?

Best to break it off right away vs. just not returning his calls.

I would go somewhere public like a cafe, over lunch. That way when you break up he might not make a scene. Just don't tell him over dinner, that's too much like another date and he could be saddened.

You could call him but let him down gently, say "It's not you, it's me" :p

Texting him that you don't want to see him again is just bad manners. :cool:

[aly]

I was just going to have a friend call and tell him:o
Or start walking past his office with my Wells Fargo guy:o

I guess I need to toughen up a little- I've got a few issues...

[Trek420]

I was just going to have a friend call and tell him:o
Or start walking past his office with my Wells Fargo guy:o

Or tell him "you're too good for me" :rolleyes:

[smilingcat]

this is about money! It isn't dating!!! He's doing it for the money and not because he is a nice guy/bad guy etc.

I would call him up and Monday morning and say, "Thank you for your time, but having seen too many mistakes, and hearing of suprise at the end is not my cup of tea. I can not go forward with your office."

Straight simple and to the point. If he starts laying on the personal guilt stuff then its really unprofessional. RUN!!

just my 2 cents.

[Trek420]

this is about money! It isn't dating!!!

It's me :rolleyes: I'm kidding.

But seriously, there comes a time in refi relationships non refundable payment may need to be made. And yes, he might not be out money but is out time.

So best to not waste his time and respectively move on.

[roguedog]

Aly,

Just call him up and tell him you've decided to move forward elsewhere. I don't know if I'd mention anything about mistakes or what not. Just say you think you've gotten a better deal at your bank and leave it at that.

As Trek says, he hasn't lost out on $ just on a little time. This is standard in the industry. Many (smart) people shop their loans. Often people apply with a 2-3 brokers/lenders and "float" the loan (not lock in a rate) until one of the lenders offers a better rate. Until the moment of lock, lenders and brokers both have invested time and maybe some money (credit, maybe some pre-underwriting and number work ups).

In the mortgage industry, they are used to loss in the pipeline. It's just part of the game.

Anyway, don't feel bad. He was going to make a lot of $ off of you. And don't let him bully you or make you feel bad. He was going to make a lot of money off of you.

<yeah.. the surprise thing sounds like a load of bullcrap. If you were going to be credited for any $, it should be disclosed in the GFE. As we say in the industry, "RED FLAG alert".>

[aly]

I wrote and said that I appreciated his time and help, but wouldn't be going with him because I got a better rate. I guess I should have just said "better deal", because he thanked me for my honesty. Then he emailed again and asked what the rate was. He says he believes the company might be willing to go lower since a small deal is better than no deal.

Since the interest rate was pretty much the same (but the APR was very slightly lower) I'm thinking I'll just say that I'm just going to stay where I am, but appreciate the offer. I can't imagine he could do much better... could he?

I should have just done more shopping up front to avoid any messiness. I guess you live and learn.