I'm in the process of refinancing. I currently have both a primary mortgage and a home improvement loan (pool). My plan is to refi and roll the two into one. I was happy with my original quote that I signed the initial docs on, but the broker just came back to me and said that they were just alerted that bc we're rolling the second loan in, the loan type needs to be changed from "Rate/Term Refinance" to "Cash-Out Refinance" and there is a one-time charge of 0.75% points.

Does that smell right? I'm 2-3 weeks into this process and am just being alerted to this, so it's a little frustrating.


They also initially told me that I didn't need an appraisal and have changed their tune on that today too, so more money out the door.

I'm ok with both of these changes if they're really required and not in the broker's control. I don't think they would screw me over. But I'd like a 3rd party opinion if you guys don't mind.

Thanks

The mortgage guy is not screwing you over. He/she is just incompetent. Pools are typically not classified as a home improvement loan. Just a cash out. Once a cash out always a cash out even if you don't take additional money out of the home. At least for now that is Fannie rule. Have them raise the rate a quarter point to pay the fee if that is better for you.

Cash outs almost never get an appraisal waiver. I don't think I have ever got one.

As for your mortgage person they screwed up qualifying and pricing the loan. No excuses on this one. Anyone with one year experience and good training should of known.

Thanks!

It doesn't inspire confidence, but I guess they're just careless/sloppy. I have a pretty nice rate locked though, so don't want to walk away.

What Steve said.... Cashouts in Texas cannot get a PIW. I've had some that AUS initially granted a waiver but then ofcourse when it gets into underwriting it falls off. The only way a 2nd can be paid off using a rate/term refi is if the 2nd was used as purchase money.

I'm assuming their one time charge of .75, is to be able to give you the rate they initially offered you. I would push back on this. Its not your fault that they didn't know what they were doing.

Depending on when you locked and what the rate is you might not have many options as cashout rates have skyrocketed. Although my thoughts are that rates will plummet as soon as we get some stability in the mortgage markets.


Are they a retail lender or a broker?

Thanks for the feedback, Braxton. They didn't go into detail on the one-time 0.75 charge and what it represents. The interest rate I'm locked in at is 2.75% for a 15yr note, roughly $325K.

And they are a broker.

They could switch to borrower paid compensation and offset some of the costs/ pay for the appraisal etc. I would ask that they do something for their error.

2.75 on a 15yr cashout is still reachable. Particularly if you are having to pay points.

When you say it's reachable, does that mean it's out there right now, or that you think it will get there?

As far as I know, I still have the ability to walk away from this loan and I would think it's justifiable given that these issues are popping up sort of late in the game.

The only points I'm paying are an administrative loan origination fee. I think it's a flat fee, but it appears to be roughly 0.30% of the loan value.

Does box A have only a origination charge or is there origination, underwriting, processing, etc?

It obviously depends on exact scenario but I just priced 325k loan amount 80% ltv 760 fico 15yr. Was actually very surprised to see it.

That sounds like my exact scenario. We're a little higher on credit score (790-800).

Box A only has that "Administration Fee". ~0.30%

Credit scores have all most no affect on rates on 15s

HouAggie said:

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That sounds like my exact scenario. We're a little higher on credit score (790-800).

Box A only has that "Administration Fee". ~0.30%

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If that is it after switching to cashout, I'd ask them to pay for the appraisal and get it done.

Sorry, that was before the 0.75% was added for the cash out. I was looking at an old doc.

I'm on track to refinance at 3.25% on a 30 year, with all closing costs paid for by the lender (roughly 4k, largely in the title and admin fees, no origination fee). No costs rolled into mortgage.
Coming down from 4.25% on the original 16 month old, 30 year loan.

The only "gotchya" is we will owe back the closing costs if we sell/refinance within a 3 year timeframe.
There was another option to do a 2.75% on a 30 year, but having to pay all closing, including a 1% origination fee (probably would have been ~8k in closing).

I'm assuming I'm making a sound decision, here?
Should reduce mortgage payment by about $290 a month.

HouAggie said:

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Sorry, that was before the 0.75% was added for the cash out. I was looking at an old doc.

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Shoot me an email or text. My contact info is in my profile.

TamuKid said:

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I'm on track to refinance at 3.25% on a 30 year, with all closing costs paid for by the lender (roughly 4k, largely in the title and admin fees, no origination fee). No costs rolled into mortgage.
Coming down from 4.25% on the original 16 month old, 30 year loan.

The only "gotchya" is we will owe back the closing costs if we sell/refinance within a 3 year timeframe.
There was another option to do a 2.75% on a 30 year, but having to pay all closing, including a 1% origination fee (probably would have been ~8k in closing).

I'm assuming I'm making a sound decision, here?
Should reduce mortgage payment by about $290 a month.

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I'm assuming this is through a credit union or not in Texas?

I didn't think that doing something like the penalty was legal. Maybe one of the other lenders on here knows something about it.

Yes, Security Services Federal Credit Union