Home refinance / GFE questions

[investnoob13]

Hi All,

I am in the process of refinance my home mortgage. I signed a GFE with the lender with given quote/rate/closing fees. I have provided all the documents and appraisal completed (home value is $400K and my mortgage balance is $250K).

Today, I received another call/email from this lender that I need to sign another GFE. The loan amount has increased $4000. My question is that can these lenders change GFEs like this? I was under the impression that this can treat as "contract" between the lender and borrower. I already spent roughly $600 for home appraisal.. It seems like I have to either lose $600 or pay the difference in amount of $4000 in next 30-years?

Is this a normal lender process? Has anyone has similar experience?

thanks,

[runner9]

The actual loan amount increased or the fees, etc. increased, thereby increasing the total amount?

[investnoob13]

The actual loan amount increased or the fees, etc. increased, thereby increasing the total amount?

The actual loan amount increased. The fees/etc remain the same.. The lender provided a Changed Circumstance Details form indicated that "Loan-to-value increased due to a lower appraised value". This form also required my signature. My Loan-to-value is 62.5%.. I don't think it's low?

thanks,

[Snow Boarder]

Today, I received another call/email from this lender that I need to sign another GFE. The loan amount has increased $4000.

Did you ask him what the increase of $4k was from?
What was the new loan balance & closing costs on the 1st GFE?
What was the new loan balance & closing costs on the 2nd GFE?
Did the lender roll your closing costs into the balance of the loan?

Is this a normal lender process? Has anyone has similar experience?

I am closing on a loan right now and what I learned is that I still have alot to learn about the mortgage process.
What I experienced was lenders giving me their convoluted internal worksheets which did not have the line A, Line B, Line A+B that the GFE does.

This website was recommended to me by a few poeple on this forum. http://www.mortgageprofessor.com

[runner9]

Can you just make a larger 1st month payment?

When we refied the had used the balance from June on our current mortgage, by closing in August the balance was lower. We received a check for the different, then made a large 1st month payment to apply all of that back to the mortgage.

[investnoob13]

Today, I received another call/email from this lender that I need to sign another GFE. The loan amount has increased $4000.

Did you ask him what the increase of $4k was from?
What was the new loan balance & closing costs on the 1st GFE?
What was the new loan balance & closing costs on the 2nd GFE?
Did the lender roll your closing costs into the balance of the loan?

Is this a normal lender process? Has anyone has similar experience?

I am closing on a loan right now and what I learned is that I still have alot to learn about the mortgage process.
What I experienced was lenders giving me their convoluted internal worksheets which did not have the line A, Line B, Line A+B that the GFE does.

This website was recommended to me by a few poeple on this forum. http://www.mortgageprofessor.com

Thanks for the feedback. Yes. I sent them an email/voice mail about that. I will follow up with them on Monday. I don't believe the closing costs are rolling into the balance of the loan. But I will ask them to confirm this.

Thank you,

Here's the actual figure for my loan and GFEs:

1st GFE:
Loan Total: $248,000
Total cost at closing: $1807.04 (without second property tax installment payment)

2nd GFE:
Loan Total: $252,000
Total Closing at closing: $3814.56 (with second installment Property tax: $2074.88 tax)

[Snow Boarder]

The actual loan amount increased. The fees/etc remain the same.. The lender provided a Changed Circumstance Details form indicated that "Loan-to-value increased due to a lower appraised value". This form also required my signature. My Loan-to-value is 62.5%.. I don't think it's low?

I would think his response would be the LTV increased so we can't offer as the quoted rate (a rate increase but not a loan amount increase).
How long is your rate locked for? I would not sign the new GFE until you know whats going on. I know you already sunk $600 but if this firm can't give you a straight answer then tell him you want a copy of the appraisal(you paid for it) and consider elsewhere.

If your refi is pretty straight forward I would consider an online direct lender like amerisave.com I learned of direct lenders on this site after I was in underwriting. If I could do it again I would have used them.

[investnoob13]

The actual loan amount increased. The fees/etc remain the same.. The lender provided a Changed Circumstance Details form indicated that "Loan-to-value increased due to a lower appraised value". This form also required my signature. My Loan-to-value is 62.5%.. I don't think it's low?

I would think his response would be the LTV increased so we can't offer as the quoted rate (a rate increase but not a loan amount increase).
How long is your rate locked for? I would not sign the new GFE until you know whats going on. I know you already sunk $600 but if this firm can't give you a straight answer then tell him you want a copy of the appraisal(you paid for it) and consider elsewhere.

If your refi is pretty straight forward I would consider an online direct lender like amerisave.com I learned of direct lenders on this site after I was in underwriting. If I could do it again I would have used them.

Thank you for the feedback. I started this refi process on 1/15.. I don't think my lock has expired.. I do have the appraisal report. It happens that I asked another lender when I started this refi process. They said the appraisal report can not be use with different lenders. I will have to pay for the appraisal fee whenever I change my lender. The bottom line is I will lose the $600 if I go away from them..

[cherijoh]

That seems very odd. For a refinance the starting point should be what you currently owe on your exisiting mortgage. To that you add any home equity you are pulling out (if they still do that these days) + any fees involved for the refi that you are rolling into the loan. That should give you the new loan amount. Is this loan with your current lender, or a different financial institution? Do you have an estimate of the payoff amount for the existing loan? It sounds like someone screwed up on the first GFE and they are trying to cover for it by adding a fee to the loan balance instead of the fees.

If anything, a lower appraised value should mean they would be willing to lend you LESS money not more.

C

[investnoob13]

That seems very odd. For a refinance the starting point should be what you currently owe on your exisiting mortgage. To that you add any home equity you are pulling out (if they still do that these days) + any fees involved for the refi that you are rolling into the loan. That should give you the new loan amount. Is this loan with your current lender, or a different financial institution? Do you have an estimate of the payoff amount for the existing loan? It sounds like someone screwed up on the first GFE and they are trying to cover for it by adding a fee to the loan balance instead of the fees.

If anything, a lower appraised value should mean they would be willing to lend you LESS money not more.

C

No, this loan is not with my current lender. I also have kind of suspect that they are trying to cover up the first GFE or something.

This is the principal amount with my current lender dated 2/1
Principal - $246,479.60
Escrow - $2,000.26
Late Charge - $0.00

[G-Money]

Many lenders charge higher closing costs for loans with LTV above 60%. My guess is that one or more of the following happened:
1. Your house appraises for less than you thought it would.
2. The timing of your tax bill is such that the lender's underwriter requires it be paid into escrow.

From the information you've provided, my guess is that the GFE is assuming you are bringing no cash to the closing. So when the tax bill is paid into escrow, they're assuming you'll finance it. When that pushes your LTV above 60%, triggering higher closing costs, they're assuming you'll finance that, too.

If you have the cash on hand to pay the tax bill, closing costs, and any portion of the loan that exceeds 60% LTV, you will probably reduce the closing costs. It should be a simple fix after a phone call to the lender.

[stl717]

I almost refinanced with Quicken last year. I got the appraisal and it came back slightly higher than I expected. Next, the same thing happened: got a "revised" GFE or something and it had almost double the fees, but as the Quicken guy said "don't worry, since you appraised higher, we can just roll that into the loan now." After questioning and trying to dig a little deeper, I suddenly got transferred to a different agent and never did get a solid reason on the increase, so I ate the appraisal fee and didn't refinance.

I did, at the time, call through the Costco refinance program and they said that Quicken is notorious for that because most people just pay the difference by rolling it into the loan or whatever. I didn't want to pay for another appraisal so I just stuck with my 5.25 mortgage.

So bottom line, GFE's can and do change, but I think it's more of a bait and switch than anything.

Good Luck.

[G-Money]

And if I'm wrong and you think your lender is trying to pull a fast one on you, you can always threaten (or simply just use) your right of rescission (depending on which state you live in). http://www.mtgprofessor.com/a%20-%20ref ... inance.htm. But I don't think this will be necessary in your case.

Good luck.

[investnoob13]

Many lenders charge higher closing costs for loans with LTV above 60%. My guess is that o e or more of the following happened:
1. Your house appraises for less than you thought it would.
2. The timing of your tax bill is such that the lender's underwriter requires it be paid into escrow.

From the information you've provided, my guess is that the GFE is assuming you are bringing no cash to the closing. So when the tax bill is paid into escrow, they're assuming you'll finance it. When that pushes your LTV above 60%, triggering higher closing costs, they're assuming you'll finance that, too.

If you have the cash on hand to pay the tax bill, closing costs, and any portion of the loan that exceeds 60% LTV, you will probably reduce the closing costs. It should be a simple fix after a phone call to the lender.

Thank you for the great information! When I file my loan application, I thought my house was only worth around $350K. I filed with $350K on my estimate value. The actual appraised value turns to be $420K. This is higher than we expected and this shouldn't trigger "Loan-to-value increased due to a lower appraised value". Anyhow, I will check with the lender on Monday morning.

thanks for the info.

[G-Money]

Many lenders charge higher closing costs for loans with LTV above 60%. My guess is that o e or more of the following happened:
1. Your house appraises for less than you thought it would.
2. The timing of your tax bill is such that the lender's underwriter requires it be paid into escrow.

From the information you've provided, my guess is that the GFE is assuming you are bringing no cash to the closing. So when the tax bill is paid into escrow, they're assuming you'll finance it. When that pushes your LTV above 60%, triggering higher closing costs, they're assuming you'll finance that, too.

If you have the cash on hand to pay the tax bill, closing costs, and any portion of the loan that exceeds 60% LTV, you will probably reduce the closing costs. It should be a simple fix after a phone call to the lender.

Thank you for the great information! When I file my loan application, I thought my house was only worth around $350K. I filed with $350K on my estimate value. The actual appraised value turns to be $420K. This is higher than we expected and this shouldn't trigger "Loan-to-value increased due to a lower appraised value". Anyhow, I will check with the lender on Monday morning.

thanks for the info.

Interesting. With that appraisal, you should be getting the lowest closing costs/rate combo so long as you aren't financing a penny more $252k. Please post an update on how the issue was resolved when you get a chance.

[investnoob13]

Here's the update. I spoke with my lender and was told they are planning to rollover closing fee/property tax into my principle. I told them no. As requested by the refi lender, I had paid off my property tax now (while I have an escrow account with my current lender - they won't able to pay right now. But they will send me back a check with my escrow amount later?). I did not sign the second GFE at the end.

Fast forward a week later:

Today, this refi lender sent me another email: "Currently on title we are showing 2 tax liens. One for Company A in the amount of $16,XXX. The 2nd one is for the State of California for $845.85 for a total of $17,XXX." I completely confused. I am not associated with Company A in anyways. I am not sure where did they get this information. Secondly, I never own any State of California taxes. I paid my taxes every year. I spoke with the agent and was told you need to sign a "Confidential Information Statement" - this is a form contains all personal information only. They will forward this form to the Title company - they can probably have this "Company A" judgement removed. However, I still need to pay the State of California tax lien.

I am completely puzzled now. Where is this "Company A" and "State of California" tax lien come from? I have never see these amounts before. Any thoughts?

Many thanks,

[investnoob13]

Another note is that I already checked my credit reports.. I do not see any tax liens in my reports. I am requesting the refi agent to provide me docs/reports. I just want to know where these records come from.

Does anyone has similar experience?

thanks,