Mortgage Refinance Completed

My mortgage refinance is completed. I called the servicer for my old mortgage and they told me the loan was paid off as of Wednesday. The payoff amount matched what my HUD-1 closing statement showed except the servicer took $57 from the payoff amount as fees for recording the lien release with the county. They still owe me some money because the payoff amount exceeded the principal balance plus accrued interest. I expect a check in the mail in a couple of weeks.

Before I make the first payment on my new loan, my new lender already sold the loan to another bank. Actually their paired me with that other bank at the time I locked my rate. I expect a letter from this new bank with a new loan number. The whole refinancing process took 40 days from the day I submitted the loan application to the day my old loan was paid off. I’m glad it’s finally done and over with.

In retrospect, I think I entered the value of my home too high on the mortgage application for the automated underwriting system. That triggered the requirement for a full appraisal. Had I given the lowest value necessary for my refi, I might have been able to get my application approved without requiring an appraisal or with only a drive-by appraisal.

A big chunk of time spent in my refinancing process was waiting for the appraisal report. I had wanted to close the refi before I went on vacation. I wasted two weeks and much anxiety on waiting for the appraisal. I may also have been able to save myself a few hundred dollars if I didn’t need an appraisal.

It may be counter-intuitive, but when you do a mortgage application, put down the value of your home as low as necessary. If you only need 80% loan-to-value (LTV) ratio, giving a high value for your home and making your LTV lower than necessary does not help you and it may cost you both time and money. The automated underwriting system does not believe the high value you give it anyway.

If I could do it again, I would also use my own local settlement agent as opposed to the settlement agent selected by the lender. At the time of signing, the lender’s settlement agent sent over a notary to my office. That was convenient, but the notary does not work for the settlement agent. She’s just an outsourced contractor for gathering signatures. As such, she couldn’t answer any question about the settlement process: Will the payoff be by wire or by check? Will it be done on the same day as the funding or on the next day? Nor could she explain the loan documents. She only got the loan documents that same morning.

After she collected the signatures and signed where a notary was required to sign, she sent the whole package off by FedEx to the settlement agent a thousand miles away. If there were any problems or somebody missed a signature somewhere, it would be hard to correct them. In the past, I went to a local office. The person at the signing table was the settlement agent. They were able to answer all the questions and explain the documents. After everything was done, they sent me a CD with all the documents I signed. That made filing so much easier. Now I have a big stack of documents, most of which I have to shred.

Let’s not forget using the lender-picked settlement agent a thousand miles away also caused me the last-minute scramble for the required certified check. I will manage the process better next time.

On the bright side, I caught a dip in mortgage rates. The lender delivered what they promised. The rates are about 0.5% higher now. With no out of pocket cost and no increase in principal balance, only the investment of my time in filling out forms, sending faxes, writing e-mails and making phone calls, I was able to lower my mortgage rate and save about $1,000 a year for many years to come. A 4.5% mortgage is worth the investment of my time and energy. I will be watching for more dips in the future.

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  1. Single Guy Money says

    I am in the process of trying to refinance my mortgage. Like you, the appraisal is holding up the entire process.

  2. Raghu says

    I’m going to close the loan at couple of hours. Since, I’m closing at start of the month, I have to pay the interest for rest of the month. But, it’s going to save around 800 per year.

    I guess it will be a while before I can get to refinance again4.5% no cost ( following TFB 0.25% ladder)

  3. HP says

    I doubt it was the value that forced the appraisal. I think all mortgages are requiring them as the lack of appraisals and pressuring appraisers to “hit the number” was one of the factors of the whole real estate bubble. Banks are now swinging the other way and being ultra cautious on every detail. Probably the only way to avoid an appraisal right now is to refi through your current lender. They might not require it since the loan would be staying within the same institution (assuming they aren’t going to resell it).

  4. Karen says

    Congratulations on your refinance!
    I just finished mine, should have read your post earlier though, because I got caught in the weekend-overlap-of-interest-between-loans. I wanted to know if you have a list of documents that one should receive/preserve after the refinance. I just have a couple of pages from the escrow agent. Thanks!

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