Mortgage refi question

[The Sisko]

If any of you have experience with the mortgage industry I'd appreciate some advice. Mrs. Sisko and I are trying to do a refi. However, our lender on the first go around backed out saying that our income documentation couldn't get past underwriting. So I took another look and it turns out I sent a draft version of our tax return so our numbers didn't match up with the IRS' info. This was back in February so some time has passed. We're going to re-apply with the correct documents but are considering another lender. Will the original lender look at us negatively after what happened? Will it look suspicious for us to re-apply with another lender? I really don't want to have two applications that get the boot for obvious reasons.

[Hersh]

7 minutes ago, The Sisko said:

If any of you have experience with the mortgage industry I'd appreciate some advice. Mrs. Sisko and I are trying to do a refi. However, our lender on the first go around backed out saying that our income documentation couldn't get past underwriting. So I took another look and it turns out I sent a draft version of our tax return so our numbers didn't match up with the IRS' info. This was back in February so some time has passed. We're going to re-apply with the correct documents but are considering another lender. Will the original lender look at us negatively after what happened? Will it look suspicious for us to re-apply with another lender? I really don't want to have two applications that get the boot for obvious reasons.

 

Did you tell them you gave the wrong documents?

[The Sisko]

Not yet. We have a lot of plates spinning at once and I only figured it out recently when I compared what I submitted to them with our IRS tax summary. Plus I wasn't sure how it would look to them to show back up with the correct return.

[Hersh]

I wouldn't hesitate to have a conversation with them. One time I was denied for home equity line. Went back 6 months later and was approved. 

[The Sisko]

Thanks. I'll keep my fingers crossed.

[just654]

Keep an open line of communication with your lender. I would also shop around. Companies will try to beat each other out. Rates are as low as they were in the fall. But you can get around 3% or lower with points now. I bought a 500K house back in Jan 2019. I have done 3 Refi's since, Started at 5.25% now down to 2.65% saving over 1K a month.   

[EmirOfShmo]

2 minutes ago, just654 said:

Keep an open line of communication with your lender. I would also shop around. Companies will try to beat each other out. Rates are as low as they were in the fall. But you can get around 3% or lower with points now. I bought a 500K house back in Jan 2019. I have done 3 Refi's since, Started at 5.25% now down to 2.65% saving over 1K a month.   

Were any of your refis $0 closing costs?

[Forehead]

51 minutes ago, EmirOfShmo said:

Were any of your refis $0 closing costs?

 

When we refinanced our first townhouse many, many years ago to drop the rate, the lender added the closing costs to the balance of the mortgage.  That might be an option.

[just654]

58 minutes ago, EmirOfShmo said:

Were any of your refis $0 closing costs?

 

Yes, since my house appraised for more each time. With lender credits the most I ever added was 4K to the loan.  Most lenders have credits and deals that you dont need to pay closing costs. 

[EmirOfShmo]

36 minutes ago, just654 said:

 

Yes, since my house appraised for more each time. With lender credits the most I ever added was 4K to the loan.  Most lenders have credits and deals that you dont need to pay closing costs. 

We have used CapCenter in RVA several times - no closing costs but a bit higher rate. We rifi'd in Jan 2021 to 3.25%. Bought a new house & sold our house last week & will use capcenter again for the mtg @ 3.25% Just curious to see if there are other lenders who do the same. 

[PleaseBlitz]

10 hours ago, The Sisko said:

If any of you have experience with the mortgage industry I'd appreciate some advice. Mrs. Sisko and I are trying to do a refi. However, our lender on the first go around backed out saying that our income documentation couldn't get past underwriting. So I took another look and it turns out I sent a draft version of our tax return so our numbers didn't match up with the IRS' info. This was back in February so some time has passed. We're going to re-apply with the correct documents but are considering another lender. Will the original lender look at us negatively after what happened? Will it look suspicious for us to re-apply with another lender? I really don't want to have two applications that get the boot for obvious reasons.

 

**The following is not legal advice**

 

1.  It will not look suspicious for you to apply with another lender.  Absolutely nothing "locks you in" with a particular lender until you actually sign where the line is dotted at closing.  The government agency that largely regulates this space encourages everyone to speak with multiple lenders.  https://www.consumerfinance.gov/owning-a-home/process/explore/contact-multiple-lenders/

 

2.  You should absolutely do multiple applications.  They aren't difficult and you will save significant coin by finding the best offer and/or playing the lenders against each other.  In addition to whatever other lender you are considering, put in an online application with LenderFi.com and Sofi.com, who are online lenders with minimal overhead (and therefore have good rates).  I refinanced by house twice in 2020 with LenderFi because rates kept dropping. 

2 hours ago, EmirOfShmo said:

Were any of your refis $0 closing costs?

 

Both of my refinances were zero closing costs because I had them add 1/8% to their rock-bottom rate, which generates closing credits from the lender that paid for the closing costs.  You can either do that or add them to the loan amount. 

Edited April 23, 2021 by PleaseBlitz

[Ball Security]

We refinanced both our primary residence and rental home through QuickenLoans and didn’t hate the experience either time.

[goskins10]

Looks like lots of good advice from others. Let me add my 2 cents. I have done multiple refis and home loans. I am buying a house as we speak. Not an expert by any means though. 

 

It should be made clear when you add rate to your loan or have the closing costs added to the loan, you ARE paying closing costs. Just not paying them up front with cash. You really need to look at the amortization table to see what rolling the cost in or adding rate does to your total repayment, especially when it comes to rate. It also matters how long you plan to make payments. If you expect to pay for the entire 30 yrs or close to it, paying the additional rate or rolling your closing costs in will cost you a lot more. But if you intend to pay it off early the impact will be less. (It's amazing how much even just $100 or $200 a month extra can make on a mortgage length - a $800/mo PI payment with an extra $150 the last time I looked can reduce the term by as much as 9 yrs making a 30 fixed a 21 yr fixed). 

 

Also, if you have the cost rolled in - look very closely at all the costs. Ask them to itemize if they don't already. They like to add fees by telling you, oh we will roll it all in and then bury a big fee. Quick Loans tried to add $9000 to a loan for a friend of mine. I got her out of it before she signed. But they were getting a total of $16,000 in closing costs. Since she had significant equity and was getting money back, they were able to hide the fees, well from her at least. 

 

As for reapplying, the only issue you may have if you change lender is additional hits to your credit for pulling reports. If your credit rating is high (say 800 on FICO), it will not be a problem. But if you are on the edge say like 659 or something like that, multiple hits can bring your credit rating down and affect your rate and/or your overall ability to get a loan.  

 

As others said, you can shop (and you should) but I would try to make it work with the original lender unless they decide to jack the rate up. But if you tell them the issues with the documents and they still act like they don't want the loan, move on. It's not worth working with them and they will not help you. 

 

 

 

[techboy]

2 hours ago, EmirOfShmo said:

 Just curious to see if there are other lenders who do the same. 

 

You can get a zero closing cost loan at any lender, because that just means that the lender is adding negative points to your mortgage, and using the credits generated to offset the other costs. Points lower the interest rate and add to the cost, negative points raise the interest rate and lower the costs. 

 

The best idea is to make sure you're doing an apples to apples comparison, pick the lender that offers the best deal, then adjust points up or down to suit what you want to do. The lender I used last time I refinanced actually gave me a table of the costs for each interest rate, and let me pick the one I wanted.

[PleaseBlitz]

And when comparing, make sure you get a “Loan Estimate” which is a disclosure of loan costs that locks the lender into those costs so they cant add stuff later. 

[techboy]

3 minutes ago, techboy said:

 

The best idea is to make sure you're doing an apples to apples comparison, pick the lender that offers the best deal, then adjust points up or down to suit what you want to do. The lender I used last time I refinanced actually gave me a table of the costs for each interest rate, and let me pick the one I wanted.

 

Just to add to this, I found a lender called LenderFi on Bogleheads where a lot of people use them, and they seem to have very competitive rates. You can get a quote on their website without giving any personal information (just zip code, estimate of credit score, loan desired and amount owed), and if you do, they'll give you such a table. They also seem to slightly beat it for an actual application, according to reports and my experience, so it's worth punching in the numbers at least.

[PleaseBlitz]

1 hour ago, techboy said:

 

Just to add to this, I found a lender called LenderFi on Bogleheads where a lot of people use them, and they seem to have very competitive rates. You can get a quote on their website without giving any personal information (just zip code, estimate of credit score, loan desired and amount owed), and if you do, they'll give you such a table. They also seem to slightly beat it for an actual application, according to reports and my experience, so it's worth punching in the numbers at least.

 

Don't lie, you learned about LenderFi right here on ES, over a year ago. 🤪

 

 

[purbeast]

We are closing on our refinance today in 100 minutes with Navy Federal.  The title company is coming to our house for us to sign the documents.

We were on a 30yr loan with 22yr left on it and switched to a 15yr loan and we're paying $10 more per month than we were for the 30yr loan lol.  Shaving off 7 years for $10 extra per month due to the rates being so low.

[Springfield]

Question for the big brains:

 

 We are about to come into a couple hundred thousand dollars in cash due to a rental property sale. We have not much in the form of high interest debt (CC debt). We do have a HELOC and a car loan, both of which are low rates.

 

Id like to refinance our home to take a huge chunk out of the principal and lower our monthly payment by probably $1,000 or so. Alternatively, would could pay off the car and HELOC but that would only give us 100k or less to refi and lower our mortgage. (Also yes, I realize that there’s capital gains taxes)

 

What’s the thoughts on this? Specifically @techboy and @PleaseBlitz but also anyone else who wants to chime in would be nice. I probably should seek professional help.

[PleaseBlitz]

12 minutes ago, Springfield said:

Question for the big brains:

 

 We are about to come into a couple hundred thousand dollars in cash due to a rental property sale. We have not much in the form of high interest debt (CC debt). We do have a HELOC and a car loan, both of which are low rates.

 

Id like to refinance our home to take a huge chunk out of the principal and lower our monthly payment by probably $1,000 or so. Alternatively, would could pay off the car and HELOC but that would only give us 100k or less to refi and lower our mortgage. (Also yes, I realize that there’s capital gains taxes)

 

What’s the thoughts on this? Specifically @techboy and @PleaseBlitz but also anyone else who wants to chime in would be nice. I probably should seek professional help.

 

 

What is the rate on your house?  If you already refinanced last year like everyone should have, then you should put the money into a managed asset account that will earn you 8 or 9 percent rather than pay of your mortgage which only costs you 3% or so.  Unless you have actual cash flow issues, and then yea, pay down the debt in whatever order you want. 

[techboy]

27 minutes ago, Springfield said:

What’s the thoughts on this? Specifically @techboy and @PleaseBlitz but also anyone else who wants to chime in would be nice. I probably should seek professional help.

 

It depends on the interest rates for each vehicle and your own personal risk tolerance.

 

Personally, I have no intention of paying down my mortgage one minute earlier than I have to, because it's at 3% and it's a fantastic hedge against inflation, if nothing else. It also allows me to invest, and while I think @PleaseBlitzis probably a little optimistic pegging a potential investment return at 8% (even if that's what the market has traditionally returned), and the mention of "managed" makes my indexing soul shiver, I would invest instead and certainly expect better than 3% over the long term.

 

I suspect were I in your shoes I'd refinance but not put anything toward the equity, but that's me. I'd pay off the HELOC and car loan if they were higher than 3%, or similarly invest the money instead if lower.

 

Others find a lot of peace of mind in a paid off house and not having debt. Not me, I'm coldly mathematical, but a lot of people aren't (which is why Econ 101 doesn't work the way it's supposed to).

 

Ultimately, "peace of mind" issues aside, it's a basic math problem... will you earn more than the interest you're paying with your chosen path?

[PleaseBlitz]

5 minutes ago, techboy said:

It also allows me to invest, and while I think @PleaseBlitzis probably a little optimistic pegging a potential investment return at 8% (even if that's what the market has traditionally returned), and the mention of "managed" makes my indexing soul shiver, I would invest instead and certainly expect better than 3% over the long term.

 

It's managed by my financial advisor brother and is at 10/10 on the aggression scale (I don't know how much, but some of it is in crypto).   It also does better than 8% but I figured that is what a regular person could get.  This is not my retirement fund, which is a Vanguard account through work, so I'm good with the risk and am still pretty far away from needing it. 

14 minutes ago, techboy said:

Not me, I'm coldly mathematical

 

Same. 

[Captain Wiggles]

(Over 8% investment return)

 

 

[The Sisko]

Great advice you all. I'm generally knowledgeable about mortgage stuff (AKA juuuust enough to be dangerous) but I definitely learned some things from your input. I really appreciate your help and not legal advice. Does that make it illegal advice though @PleaseBlitz?😁

[goskins10]

56 minutes ago, Springfield said:

Question for the big brains:

 

 We are about to come into a couple hundred thousand dollars in cash due to a rental property sale. We have not much in the form of high interest debt (CC debt). We do have a HELOC and a car loan, both of which are low rates.

 

Id like to refinance our home to take a huge chunk out of the principal and lower our monthly payment by probably $1,000 or so. Alternatively, would could pay off the car and HELOC but that would only give us 100k or less to refi and lower our mortgage. (Also yes, I realize that there’s capital gains taxes)

 

What’s the thoughts on this? Specifically @techboy and @PleaseBlitz but also anyone else who wants to chime in would be nice. I probably should seek professional help.

 

Not the best person for investments, but there are some banks that will allow you to make a bulk payment on your mortgage, reducing the payment but NOT by refi. The bank I am using for my mortgage allows it one time during the life of the mortgage and only costs a nominal $300 fee instead of closing costs on a refi. For example, you have a current mortgage of $400,000 at 3% with a P&I payment of $1700. You can say pay it down to $200,000 with a resulting payment of just under $850 and only pay the $300 fee (fees could and likely do vary) instead of a refinancing. Not to mention it's amazingly less hassle. This is best if your rate is already low. I would check with your lender. But that's just me. 

 

After that, I agree with your assessment of finding a professional finance consultant.