Mortgage Refi pickle...any mortgage guys??

[walleye vision]

Hey guys. Got a question for ya. I recently locked a refinance interest rate for 60 days with a bank. In the mean time, I found a better deal (lower rate, and I'll save 2 grand at closing). Is there any way to get out of my agreement w/ the first bank or am I stuck / legally obligated to work with them?

Any advice would be greatly appreciated.

WV

[hartner62]

Why kind of documents did you sign? If you haven't closed go with the other guy if it is truely a better deal.

[walleye vision]

I signed a rate lock agreement for 60days. They sent a package of documents to sign (application), but I haven't sent it back yet. While looking over the rate lock agreement it says something to the effect that i can't work w/ anyone else for 90 days after the rate lock expires. That seems pretty bunk to me and an empty attempt to scare customers. Any other thoughts? I just don't want to do anything illegal or get fined.

[snoozebutton]

Go to the second bank where you found the better deal and show them the papers. They'll know what you can and can't do.

[Will]

i am a "mortgage guy", and in this highly competitive market, lenders will use those kind of tactics to keep you on the hook. you can be at the closing and change your mind and stop the process. remember this, it takes your signature, so if you don't like something, don't sign it.

be careful, just because you can save 2 grand at closing, does'nt mean you are getting the best deal. check the rate you are getting, then ask them what your "a. p. r." is. i can explain more if you need it, let me know.

[walleye vision]

Will,

The new rate I was quoted was 4.88% with an APR of 4.89 due to the low closing costs (approx $1000). No points, no origination fee either.

The bank I locked in with was 5.00% with an estimated APR of 5.066%, no points, no origination, and closing costs of $3000.

I guess the main thing I'm worried about is if I walk from the first bank, can they hit me with fees/penalties etc. Also if I can't lock in with the other bank for another 60 days, the rates may jump up and then I'm screwed and shoulda taken the deal from the first bank.

Any thoughts?

WV

[Eckie]

You can walk from the first bank w/o any fees or penalties. It's your right. In fact, you have the right to walk up to 3 days after you legally sign closing documents due to a federal regulation called "right of recission". It gives you the right to change your mind on a refinance transaction up to 3 days after you've closed.

The rates you've mentioned are very close -- but the closing costs vary ----- my recommendation is this -- obtain a good faith estimate in writing from each lender and compare "lender fees"...don't worry so much about the bottom line (not that it's not important), but you don't necessarily need to pay particular attention at this point to the "3rd party fees". These are fees charged by a title company. These fees will be charged to you no matter who you choose as a lender. You also have the right to use any title company you want. Title company fees can and will vary also.

The only fee you may be on the hook for is an application/appraisal fee, if you paid one up front.

[gundy89]

Eye,

You technically can withdraw at any point prior to funding, however you should at least discuss this with the lender you locked with.

As a consumer, you may not know this, but our relationship with lenders involves a "pull-through ratio". This is the amount of closed loans vs the amount of locks. It costs the lender money when they lock a loan, so if your pull through ratio as a broker is below a certain %, they will either cut you off or give you higher rates. The lender that the loan originally was locked with probably has a renegotiation policy in the event that rates dropped.

It may or may not matter to you, but by just pulling out without discussing it with your loan officer has a direct affect on future borrowers. I will bet that within the next 6 months, a borrower will be required to pay an upfront fee in order to lock a loan. This is a direct result of the "pull-through ratio" that I mentioned earlier.

FYI, those look like last weeks rates if a 30 year.

[Will]

you probably can't lock in with that same lender for 60 days, but that would not apply to another lender.

[Eckie]

Great point, Gundy....

Eye, if you didn't lock that rate in with the "new" lender, I would take the odds that the rate offered is no longer available. Rates went up Thursday and Friday.

[sticknstring]

What are the 30 year fixed rates going for currently?

[Smails]

I locked at 4.875% with 0 orig and 0 disc points about 1 1/2 weeks ago.

[sticknstring]

That's enticing.

[gundy89]

It's a little higher than Smails locked in, but not too much higher. I can't give a rate without an apr and a bunch of legality sorry. It really depends on purpose (cash out/rate term), credit (under 720 scores take a hit), and Loan to value.

[Eckie]

If I were Walleye Vision -- I'd take a close look at the fees being charged by bank #1...if you decide to cancel, might be best to wait a bit longer...there's a very good chance rates are going back down again.