How to Apply for A Home Mortgage Loan Refinancing
Chateau Du Mer Beach Resort
Patience, Perseverance and Paper Work
Last June 27, I decided I will apply for a refinancing loan for the mortgage of my primary residence. After talking to numerous lenders looking for the lowest rate and the lowest or zero closing cost, I decided on the major bank where I have currently my checking account. They quoted me the lowest interest rate and almost zero closing cost ( a flat fee of only $150) and an upfront but refundable fee of $465, for the home appraisal..
I could have opted for a much lower interest rates( less than 4%) but with closing costs in the neighborhood of $3000.
With the interest rate (4.125%)/(4.108 APR) that I have signed for at 20 years fixed conventional loan, I will be saving around $160 per month based on my current mortgage payment ( 5% at 30 years fixed Conventional Loan). I am not eligible for a HARP loan because the ratio of equity in my home and my mortgage debts is more than 20%
I was dealing with a mortgage specialist,(SO) of the Bank Headquarters in the East Coast- a 3 hour time difference, so I do all my e-mailing and talking in the phone in the morning here in the West Coast. The documents required in this initial application were: copies of my sources of income( 1099 for my SS and pension funds income), copy of my house hazard insurance, a copy of my current bill from my current mortgage lender, a copy of my and my wife's credit reports, and a copy of my bank current statement both my money market and savings account.. Since I am currently banking with my new prospective lender the mortgage specialist save me some time by his accessing my bank statement in their files.
June 30: SO informed that my application was sent to the bank branch in the West Coast who will underwrite my application. The next day, I received a call from a loan specialist(DB) in the West Coast, asking for confirmation of all the important facts that I gave during the phone conversation and e-mailing process. I was asked if I have a preference for a Title Company. I answered the negative. The loan specialist informed me he will take care of it. He informed me that it appears that my application package will not encounter any problems and a tentative closing date in the next 35 to 45 days is his goal. The interest rate quoted is locked up to 8/26/14.
July 2: I received an e-mail from a title company requesting a copy of my signed borrowers authorization. This will allow the title company to make credit and payoff inquiries needed for my loan application.
In the meantime DB in the West Coast branch, informed me to expect a welcome package by mail which will include the Good (but Inflated) Faith Estimate and seven other loan documents that both my wife and I will have to sign. We have to call SO, the Specialist in the East Coast to help us run through the Loan Documents as soon as it arrives.
July 7: I received a letter and a call from title company, verifying the details of my living trust and also talking to my current lender the pay off and balance of my mortgage account and the next due date. My next payment is not due until September 1st. It appears the title company is doing its job on time. I received the welcome package on July 3..
July 8:: I submitted my loan package signed application via mail. The loan officer(SO) help me run through the signing process and the procedures was painless. I was told to wait for at least 4 working days and the next step would be a Home Appraisal.
July 10: I received a call from my loan officer(DB) that my application had been pre-approved. However before we can proceed to the final approval, he needs a copy of my IRA distribution income, the latest bank statement where I have my money market account, a clearer copy of my civil service annuity statement and a letter from my other pension fund stating that my monthly income will continue until I die. I have to call my FINANCIAL ADVISER to get a copy of my IRA distribution. In ten minutes she gave me a copy via email. The next step I had to do was call my pension provider. They will send me a letter via post office mail stating my monthly income and stating that I will be receiving this for life. This will take at least 4 working days.
The other requirement that my loan officer(DB)requested that irked me was to provide a letter of explanation why we have two addresses here in California. The first address was the house that we rented for one year prior to our purchasing our current home. I felt this is not a necessary requirement, but I have to comply to it. I am feeling a little bit disappointed and harassed on the loan process and its requirements. However, I am telling myself just to be patient. We have another month to squander and wait!
July 14: An official home appraisal was conducted by the bank underwriting personnel of my loan application. The next day the appraisal report showed that my house was 20K less in value as originally reported by Zillow. com and real estate property Comparables in our subdivision. I was disappointed but DB said this will not affect the interest rate in my application.
July 18: I received a copy of my Home Appraisal report and an e-mail that the underwriters still need a two-month statement from my money market account and a letter from Office of Personnel Management (OPM) of at least three years of continuance of my Federal pension, although this pension is for life.. I have to wait for my next monthly statement for my money market account and I have to call OPM for that letter. Again, I felt this is not necessary, but I have to comply with the bank requirements. At this point, I felt like withdrawing my application. However if I do, I will lost $465 the amount I prepaid for the home appraisal and credit reports.
July 25: 10 AM -I received the letter of verification of my annuity from OPM. I immediately scanned and e-mailed it to DB along with two months statement from the bank who has my money market account.
1:30 PM: I received a thank you note from DB acknowledging receipt of the above two documents. Now I am just waiting for the final approval.
July 28: I got a personal call from DB informing me he has submitted all the documents required by the funding department. He expect approval in 3 to 4 working days, that is July 31 or August 1. He will be on vacation afterwards, so in case approval is delayed my files will be assign to another agent. If this happens he will let me know the person assign to my case. He also gave me the name of his supervisor(HB).
July 30: I received a call from DB informing me he had scheduled the closing and signing off ceremonies for the loan for August 1 at 11 AM here at our residence. Once my wife and I signed it, the loan is approved and our next payment will start on October 1, since my next payment for my current mortgage lender is not due September 1.
Home Refinancing Needs
Is your current Mortgage Interest 5% or Higher?
After the Pre-Approval Notification
August 1, 11:45 AM: No one showed up for the signing. I called my loan agent supervisor(HB) and also sent him an email.
The supervisor of my agent informed me that my agent did not send my papers to the closing department before his vacation, He said he will send my files to the closing department today and most probably it will be Monday before we can close the loan.
August 2: I received a letter from the bank that they will fund my loan, but they have retained an independent contractor to provide specific processing, underwriting, and certain related services on the bank's behalf in connection with my loan application.
Here's what is on my-online application as of August 4, 12 Noon
1. Verify funds to close from the Borrower on the HUD-1 Settlement Statement do not exceed $ ------
2. Obtain evidence that the following lien is paid prior to or at funding: Borrower(s) Creditor Acct # Balance Payment ------------ ------------ ---------------- ----------
3. Obtain the final Settlement Statement (HUD-1) to verify any incidental cash back to the borrower does not exceed the lesser of $2,000 or 2% of the loan amount. Any incidental cash back as a result of excess premium pricing must be APPLIED as a principal curtailment. Incidental cash back is not allowed for owner-occupied properties located in the State of Texas.
4 Bank of ------- reserves the right to re-evaluate the conditional approval of your loan request in the event Fannie Mae (FNMA), Freddie Mac (FHLMC), Government National Mortgage Association (GNMA), Federal Housing Administration (FHA) and/or Veteran Affairs (VA) guidelines are changed prior to the expiration date of this conditional approval letter. This means the loan may be further conditioned, may be subject to change in terms or the PROGRAM may no longer be available to you.
5.Verification of applicant(s) identity to comply with Bank of------- customer identification process and the USA Patriot Act*.
6. State- or government-issued picture identification (for example: valid driver's license, passport, etc.)
7. If necessary, certified funds (for example: certified check or cashier's check) are required to complete your transaction. Please contact your Title Company/Closing Agent for further instructions.
August 5: 9:00 AM: I received an e-mail from SO, my loan officer from the East Coast, asking me to choose either August 7 or 8 for the closing either at our home or in the local branch of the bank. I selected August 7 ( Thursday)10 AM at our home.
August 5; 1:48 PM: I received a call from JP, the representative and notary public of the local title company confirming the closing date for Thursday. She asked me if we have an ID such as a drivers license. I said I have a DRIVER'S license but my wife does not drive and has her senior ID. She said the senior ID of my wife is OK. She promised to call me to confirm whether she is coming at 9:00 or 10:00. I asked her how long will the signing and closing process. She said from 30 to 40 minutes depending whether she has to explain everything that we are signing or if we do not agree with the terms of the loan, we can still refuse to sign. I am hoping this will not happen.
August 6: 3:30 PM: I got a call from the closing specialist of my bank lender (PB) based on the West Coast, asking if I could postponed the closing sign off at 1 PM instead of the 10 AM. The reason is that she is still working on the HUD-1 documents. PB promise to call me at 9:00 AM for updates on August 7.
The Day to Celebrate-Closing Day
August 7: Final Closing Discussions and Signing Off:
9;30 AM: I had about 30 minutes conversation with PB.the bank's closing specialist. She explained in detail the itemized costs in the HUD-1. I have a question on the $465 upfront fee. PB said it is included in the credits I will received and counting all the credits I will get, I will need to issue only a personal check to the title company of only 486.89 which is mostly interest accrued on my old loan based on the final closing date of 8/19/14. The actual closing date is scheduled for August 12, so there is a 7 day difference. My pay off balance accrues interest of about $31 per day,thus I will be expecting around $217 refund.. Again my next payment on my new loan is not due until October 1, 2014.
1:00 - 2:30 PM: Signing:The Notary Public from the Title company was right on time. As soon as we have our preliminary greetings, she immediately asked for our ID's or driver's license and took photographs. She was very professional but easy to talk to. She explained what we were signing for. There were 175 pages of paper documents and I think my wife and I have signed our names over 25 times. It took 1-1/2 hours of signing and notarization of our signatures. We got a copy of the 175 pages of documentation. With the exception of the HUD-1 settlement, my copies were almost not readable. There will be a 3-day cooling off period before the funds are disbursed and the loan completed. We were offered an automatic deduction for my monthly payment from my checking account. I refused because I want to pay on-line using the bank bill pay system. All in all the procedure went smoothly but was long and my hands got tired from the signing process. However, I feel happy of the HUD-1 settlement funding. The bank gave me over $2000 of credits for the closing cost expenses. Again, all I had to pay by personal check was $486.89. Most of this is for interest on my old loan.
August 12: I checked the status of my application on-line. It says, Congratulations your loan has been successfully closed. To pay on line please sign in or enroll in our bill pay program.
August 14: I received a congratulation and thank you e-mail from SO, the loan specialist from the East Coast. In the e-mail he alluded that I might received a survey from the bank.
Conclusion and Recommendation
Conclusion: You need the 3 P's, Patience, Perseverance and Papers for a successful home refinancing mortgage loan from this bank. However, I recommend this bank for your refinancing needs with caution. .Caution in the sense that you need to do your homework, ask questions about the closing costs, points and other small print in your loan application. If you want to know the name of the bank and the loan officers and their contact numbers, please let me know. Finally beware of lenders who promised you the moon and approval in 3-4 weeks.
One mistake I made during this process was published my interest in the Internet on either refinancing my home or getting a reverse mortgage. Until now I an still getting calls and e-mails from loan sharks and personnel from several minor mortgage lenders who wants my business. Yesterday a persistent loan officer was still trying to convince me to do business with him even after I told him I have just closed my loan and no longer interested in home refinancing. He said he can give me a much better deal than what major banks can. He would not quit talking so I slammed the telephone on him. There are so many lenders in the web that wants your business, so beware and be careful in choosing the right lender. Good lenders does not promise you the moon,the stars and the heavens and approval in three weeks.
Is it really possible to have approval in this short period of time? If you are in the mortgage loan business and reading this, I will like to hear of your opinion. Is the rate and closing costs I got really a good deal? I have talked to a loan specialist in the bank where I have my money market account and he said I got a real good deal in my refinancing mortgage loan as discussed above. I hope you find this posting worth your time..
* Discussion: Can you explain to me what is the relevance of the US Patriot Act in my application for Home Refinancing?. Was this to insure that I am not involved in any terrorist activities, money laundering etc...Do other lenders also require this before loan approval?