My mortgage refinance has been approved by the lender. Now it’s time to pick a date for signing the papers. Is any day of the week better or worse than others? Yes, if you want to avoid paying extra interest on a large sum of money.
The federal law (15 USC 1635) says if you refinance the loan on your primary residence from a different lender, you have 3 days to rescind. That means if you change your mind after you signed the documents, you can still get out of it within 3 days. It also means that the lender won’t fund your loan until the 3-day rescission period is over.
There is no right of rescission on a purchase loan, or if you are refinancing from the same lender, or if the loan is not for your primary residence. The 3-day clock starts on the day *after* the loan documents are signed and all the necessary disclosures and notices are given. Saturday counts as a day but Sunday and bank holidays don’t count.
Here’s the usual chain of events when you close a mortgage refinance as practiced in my area:
Day 1 : You sign the documents and receive all the disclosures and notices.
Days 2-4 : Rescission period. Remember Saturday counts but Sunday and bank holidays don’t.
Day 5 : The escrow agent requests funding from your new lender. The new lender wires the money to the escrow account. You start paying interest on your new loan on this day. You are still paying interest on your old loan.
Day 6 : The escrow agent pays off your old loan by wire transfer if your old lender accepts payoffs by wire. If they don’t, the escrow agent sends them a check by FedEx. The escrow agent also records the new mortgage with the county recorder’s office. You are still paying interest on your old loan until it’s paid off.
Day 7 : If the payoff is sent by FedEx, the old lender receives the payoff check. The old loan is paid off. You stop paying interest on your old loan.
You start paying interest on the new loan from the day the loan is funded. You stop paying interest on the old loan on the day it’s paid off. There’s going to be at least one day of overlap for which you are paying interest on both loans unless your escrow agent pays off your old loan by wire on the same day your new loan is funded. You want to make sure you minimize that overlap to only one day or maximum two days.
Here’s a little calendar for the loan refinancing events taking into consideration the 3-day rescission period but assuming there is no bank holiday involved. Each number represents a day on which the loan documents are signed. Just follow the number. For example, if you sign the docs on a Tuesday, the rescission period ends on Friday; the new loan will be funded on the following Monday; and the old loan will be paid off on the following Tuesday (by wire) or Wednesday (by check).
| Mon | Tue | Wed | Thu | Fri | Sat | Sun | |
| Docs signed | 1 | 2 | 3 | 4 | 5 | ||
| Rescission period ends | 4 | 5 | 1 | 2 | 3 | ||
| New loan funded | 2 , 3 | 4 | 5 | 1 | |||
| Payoff wire sent OR check FedEx’d | 1 | 2 , 3 | 4 | 5 | |||
| Old loan paid off (by wire) | 1 | 2 , 3 | 4 | 5 | |||
| Old loan paid off (by check) | 1 | 2 , 3 | 4 | 5 |
The calendar shows that Monday is a bad day for closing because your new loan is funded on Friday, and you start paying interest on it but your old loan isn’t paid off until the following Monday or Tuesday. You pay interest on both the old loan and the new loan over the weekend.
If payoff is done by a FedEx’d check, signing the docs on Friday is also pushing it. If all goes well, the old loan is paid off on the next Friday. If there’s a delay by one day, you will also pay interest on both loans over a weekend.
Signing the docs on Tuesday or Wednesday is the best for closing a mortgage refinance because the new loan is funded on Monday and you have the entire week to work with. Thursday is also a good day but not as good as Tuesday or Wednesday.
If you have to sign the docs on a Monday, make sure to specifically ask the escrow agent not to request funding on Friday.
Next week, after I sign the loan documents, I will explain what those documents really mean.
[Update on March 4, 2008]: I asked the escrow agent and she said they would pay off my old loan using a wire transfer. That way it cuts down the interest overlap to only one day. She also said that not all lenders accept payoffs by wire. I revised the calendar accordingly.
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indexfundfan says
tfb,
Questions for you :
1. Is FedEx always involved to pay off the old loan? Or is it only for the escrow company you are using? Wouldn’t the escrow agent wire the money to the old lender?
2. Based on your chart, I couldn’t figure out why Thursday is not a good day to close.
Thanks.
Harry Sit says
I don’t know the answer to the first question. All my refi’s are done at the same escrow company and they always used FedEx. I’m interested in hearing what others’ experience is.
Thursday is also a good day, just not as good as Tuesday or Wednesday. If you sign the docs on Thursday, you have a 1-day cushion for any delay. Tuesday and Wednesday have a cushion for 2 days. In the order of preference, it is
Tue/Wed > Thu > Fri >> Mon
indexfundfan says
Thanks. I am asking all these questions because my refi will close on a Thursday. Also, this is the first time I am not doing a refi with the same lender.
I think a wire was used for my last refi, but I could be wrong.
Harry Sit says
When I sign my documents, I will ask them about paying off the old loan by wire.
I hope you got a good rate too!
ManInTrouble says
I have just refinanced my loan. The paper was signed on 5/6/09 (Wednesday). According to the final closing statement, I start paying interest to the new lender on 5/11/09 (Monday). The closing date is 5/12/2009 (Tuesday). But when I contacted the old lender, I was told that they received the funding on 5/15/2009 (Friday) and therefore, they charged me interest for 14 days.
I understand that it’s typical to pay 1 or 2 days of overlap interest during refinance. But 4 days of overlap interest seems unusual (especially when the closing date falls on a Tuesday).
Questions are:
1. If the closing date on the statement is 5/12, should I pay the interest for 5/11?
2. What could have caused the delay between 5/12 and 5/15? Any ideas?
Harry Sit says
@ManInTrouble – (1) Yes, because typically the loan is funded the day before the closing date. (2) You should ask your settlement agent how and when they did your payoff. If they sent a wire, your old lender should’ve received it on Tuesday 5/12. If they FedEx’d a check, your old lender should’ve received it on Wednesday 5/13. If your settlement agent didn’t send payoff on time, they should pay you the extra interest. I had this happen to me once. I complained to the settlement agent. They paid me the extra interest because they caused the delay. On the other hand, if your settlement agent did the payoff on time, you should get the wire or FedEx tracking number and complain to your old lender for crediting you too late.
ManInTrouble says
I finally got the issue resolved, but it ain’t easy.
I asked the settlement agent about the overlap interest – no response at all. I escalated the issue to the branch manager. She said she needed some time to investigate. Three weeks later, she still could not provide the details of the closing date to explain the excessive overlap interest. I finally have to talk to the regional manager to get it resolved. No details was given, but they offered me a refund check.
Once again, I want to thank you for your comments and support. Double thumbs-up for the refinancing event calendar.
Bravo!
Danny says
My situation is this: I closed 6/23, funds were suppose to disburse 6/30 and for some reason they are delaying. What is my recourse?
Shirley Siegrist says
What do you think of closing on a refinance by notary? Lender said they will send a notary to the house. Who is responsible to explain the terms and legalities of the forms signed? Somehow it does not seem like the best practice.
Harry Sit says
Shirley – If I have a choice, I would prefer to close it in a local settlement agent’s office and face a real settlement agent. A traveling notary can make some explanation but they don’t know all the answers. See my experience in Mortgage Refinance Completed.
JB says
Why would someone go with using a Notary at a place of the borrowers choice, instead of an agents office? Could there be something sneaky or underhanded going on by a spouse?
Harry Sit says
Nothing sneaky or underhanded. If both names are on the title, both must sign. It’s more convenient to have someone come to you, for instance during lunch hour at work.
suzanne lustgarten says
confused on interest due on estimated closing statement
On my estimated closing statement which was due to close 10/26
they charged me interest on old loan 10/1 to 11/1 (interest for whole month)
even though I made october 1 payment on old loan which I know pays interest for september. The interest i am charged on new loan is 10/26 thru 10/31.
So on old loan shouldn’t i just be charged 10/1 thru 10/26?
1.On old loan aren’t you just charged interest up until the date the loan funds?
2. Is it normal procedure on a closing statement to make the borrower pay a full month interest on the old loan for the month the loan closes? Do you get a credit back when they receive funds paying off old loan since you paid interest for the whole month on old loan at closing?
Glen Furumizo says
I signed on 11/2, closed and funded to escrow on 11/6 they are now telling me my old loan will be paid off on 11/16. 10+ days of overlap interest. Can they do this?
ManInTrouble says
Glen,
Who are “they”? The title company or the old lender? How did “they” explain to you about the discrepency between the closing date and the paid off date?
Glen Furumizo says
The Title co is Escrowpoint, Inc.
23282 Mill Creek Dr., Ste. 340
Laguna Hills, CA 92653
The old loan is BOA.
When the loan funded on Fri after noon they said 48hrs but tues came then they said Weds was a holiday so thurs. Then thurs came and they said it will be paid off on the following monday 11/16. I explained it was unacceptable and they said it is no fault of their own and they will turn it over to a manager to look into.
Harry Sit says
Glen – Sounds like the title company seriously dropped the ball. You shouldn’t have let the new lender fund the new loan on a Friday to begin with. Even that, if you trace the little calendar in the post, your old loan should’ve been paid off on Tuesday Nov. 10 at the latest. Complain to the title company. Don’t take no for an answer. See how ManInTrouble got a refund in comment #7 above.
Den says
My refinance was closed on 2/2. The old lender received the fund on 2/2 afternoon. Do I need to pay my old lender interest for 2/2?
steve says
if refinancing with the same bank why should there be a need for a wire or check payoff. closing was suppossed to be on the 30th buy didnt happen and now with the holiday weekend am i going to be paying pre paid interest for the whole month of june?
Chris says
I have recently closed on a refi loan (10/22) and signed all the new loan docs. Funding was supposed to be (10/25) but when contacted the title company about repaying old loan, they said the lender needs additional documentation. Contacted the lender and said they need additional info before they will fund.
Can they legal delay funding even after all the final loan documents were signed?
Chris says
REVISION:
Funding was supposed to be 10/27, not 10/25 as previously stated.
Harry Sit says
Chris – Yes they can delay funding if they find some documents not to their satisfaction. The law only says they can’t fund until a certain date. It does not require them to fund as soon as that date arrives.
cjs755 says
I’m closing on my refinance loan next week. I told my credit union that I want to pay my taxes. My loan amount is $149k, which includes closing costs. But when they sent me my committment letter they increased to $157(taking account escrow). The committment letter said that I can now pay my taxes but my loan amount is still $157k, and they will pay me back the escrow amount included in the $157k. But now I’m paying interest on the $157k and not the $149k. When I can called to see if I can change the loan amount they said I would have to start application process from the beginning. Can they change the loan amout the day of closing?
Harry Sit says
cjs755 – If you don’t mind the slightly higher monthly payment, you can just make a one-time principal payment of $8k immediately after closing. Your loan will be paid off sooner than 30 years (or whatever your term is) and you won’t be paying interest on the higher amount. That will be the easiest way to handle this.
Paulin says
My refinance will be closing in next couple weeks, since both Fridays are holidays during the time period, will Monday closing be best to avoid paying overlap interste?
Thanks a lot for your advise!
nikki says
what if the old lender comes back after a few weeks and state that you still owe them money. This is even after all documents were signed. Checks cashed. New lender is in place and you have started paying the new lender. What are my options? And what is “po shortage”?
Harry Sit says
Yes it’s possible the payoff amount was less than a full payment. PO stands for payoff. You will have to pay them the shortage and get them off your back. How much are you short?
bib says
just send me the money ill get it done for you
Tatyana Sannikova says
My refinance with the same lender will be closing on Feb25, Friday. According to MA law it takes 3 days ( Sat, Mon and Tuesday) till my old loan will be closed. So my new loan will start on Wed, March 2nd. Since I made Feb 1 payment on old loan do you think it would be better to close on March 1st, Tuesday?
Confused says
Hi, Thank you for sharing your experience. I am new to the refinance process and just signed my closing document online more than two weeks ago. However, nothing has happened ever since. The new lender (ally) didn’t transfer the fund to the old lender (gmac) and I am still paying my old mortgage. Is this normal? Based on your article, the fund transfer should have happened within a week once the closing document was signed.
If anyone can provide any information, it will be greatly appreciated. Thank you.
Harry Sit says
@Confused – The documents you signed online are probably just disclosures, not the closing documents. You will have to sign the closing documents in person in front of a notary public. Your new lender will notify you when it’s time for that step. Just wait.
Dazed says
This is a good article. I have questions in my specific situation. My LO is asking when I would like to close. According to the article, tues/wed is best but if I choose that for next week seeing how the holidays are involved, how is my scenario impacted? Should I just postpone until the following week as I understand that closing the beginning of the month is also very favorable from a prepaid interest perspective.
One curious item, LO said that my loan would fund on or after 11/29. That being the case wouldn’t it be best that I close ASAP?
Harry Sit says
@Dazed – You count the days: leave 3 days after you sign for rescission. Next Tuesday is still the best day (Wed, Fri, Sat for rescission, OK to fund on Monday).
Dazed says
Thanks for the reply! I went ahead and scheduled for tues, 11/22 to which my LO promptly replied that closing is scheduled for 11/23, wed??? Anyway, not sure it matters at this point, but isn’t Friday, 11/25 a bank holiday too (i.e., rescission would not count that day either?
Harry Sit says
@Dazed – Friday 11/25/2011 isn’t a bank holiday. See holidays observed by Federal Reserve.
Dazed says
So closing on my new date (Wed, 11/23) is as if closing on Thursday (without Holiday) correct?
Harry Sit says
@Dazed – Yes, that’s correct.
WaitingForFunding says
Thank you for a very comprehensive overview. Im in the process of refinancing a loan. Got my clear to close last Tuesday morning, closing papers drawn late Wed and sent to Title co. We signed closing papers on Thursday morning, and were told that a three day rescission period will take into effect before funding happens the following Tuesday. The signed closing papers was overnighted to lender Thursday by the escrow officer. Im assuming that within the three day period, that they will review the papers sent by title co. Apart from reviewing the signed docs, will the lender undertake any other activities such as re-running credit, verifying employment, etc…etc.. before funding and during the rescission period? Or are we safe to say that they will fund the loan provided that they are OK with all the signed papers? I’m particularly concerned about credit report rerun since our DTI is about 4% below the threshold. The last credit they ran on me during the loan process is exactly 61 days from the funding date or 60 days from the rescission date. Not sure if ALL lenders ALWAYS re-run credit before funding…and if this could pose as an issue if my DTI change. For the folks that are reading this and have done a refi – did they re-pull credit for you the day of funding? or during the rescission period?
Harry Sit says
@WaitingForFunding – I believe they do a 2nd credit pull and verbal employment verification during those 3 days.
Jennifer says
I refinanced my primary home in September. Part of the funds to be disbursed included a tax payment. However, when contacting the tax authority I was told that the check dispersed to the tax authority was returned to the escrow company as the tax was not due and the amount disbursed far exceeded what will be due in April. The escrow company has acknowledged the receipt of the funds back into escrow but have yet to resolve the funds (financed by my loan) that are sitting in escrow. They have sat on these funds since October although I call them every week for a status of these funds to no avail?
Any suggestions?
Victoria says
What is a signature addendum page why is it needed?
Harry Sit says
@Jennifer – I had a similar situation happen to me once before. The old lender paid the tax but it wasn’t reflected in the records yet so the new lender had me pay again in the escrow. The tax authority got paid twice but they sat on the extra money for a long time. They said it was their policy to wait 8 or 10 weeks. Eventually they returned the money to the escrow company which promptly returned it to me.
Is this escrow company unrelated to the lender and they are just doing disbursements? Or is the escrow just part of your regular escrow held by your lender for tax and insurance going forward? What’s their explanation for not returning the money to you? Are they waiting to still pay the tax when it’s due?
Nancy says
We decided to try refinancing with an online company and it has turned into a nightmare. Do we have any options at this point? Our current issue is that our loan was not funded until 12/22 but as of this morning neither our mortgage with Bank of America nor our HELOC with PNC have been paid off. I have requested pay off information from our loan officer. Our right to rescind expired on the 17th. Here’s a few of the gory details.
12/12 1st closing. Errors: 1) Closing costs overstated by over $2300 2) Most of documents dated 12/14 and 3) Loan amount sometime $235K, sometime $237K. Instructed by loan officer to complete closing and that corrected HUD documents would be emailed to us to sign.
12/14 Since we still had not received corrected HUD documents after multiple emails & phone calls, we emailed that we were planning to rescind our loan at noon on the 15th if we had not received corrected documents.
12/14 After receiving our email about rescinding the company re-schedule the notary for very late at night Issues: 1) Additional $1500 charge added to HELOC payoff, 2)Documents now dated 12/13 and 3) not all the documents we signed at 12/12 closing were included
12/15 Corrected HUD emailed with $1500 charge removed. We signed and emailed and faxed back.
12/22 loan finally funded
M. Singri says
I am currently going through refinancing. My lending agent has requested sign the document with errors. It happened like this. The first set of documents had names misspelled. So i requested him to correct and send them. I signed the second set of documents and sent it. Now he is asking for me to send first set of documents with errors. He tells me that he is required to prove that he had sent the same and for that he needs signatures on these papers. Is this valid? How do I know that these documents will not be misused? Can you please answer?
Thanks in advance.
Harry Sit says
If it’s just misspelled names you just cross them out and write in the correct spelling.
John Hutton says
Can a mortgage company choose not to fund a loan after the closing papers have been signed? Can they add additional requests for documents after the closing?
Harry Sit says
John – Yes. Nothing is official until the papers are recorded. If they don’t like something they don’t fund.
JR says
First of all, great info.
For Day 7 (old lender receives payment), are you required to pay interest on the day the old lender receives payoff ? I’m expecting the title company to call me Monday 07/23 to schedule doc signing and would like to minimize overlap … not sure about Fedex/wire situation yet.
Harry Sit says
JR – No, no interest on the day they receive the full payoff.
Hotelcharlie2002 says
We are closing on our Refi on Monday. It is an online company so they are using a traveling notary. We are planning on financing a new car on Tuesday. Is it safe to assume they will not be pulling our credit again after we sign? Would having a new car loan be enough of a reason for them not to fund the loan?
Mike says
After signing there is a 3 day wait period that they have to wait per law before paying off the original company. This is the time for consumers (you) to choose to not to go ahead. Thus even though you have signed the funding will be delayed. Thus if you can delay for 3 days, I would think that is a safer bet.
Evelyn says
I received my refinance documents for $120,000 in the mail today. I have not signed the documents. The document listed all my debt which is extensive. Seeing the list and amounts were overwhelming. The equity in my home ($160,000) should cover this debt. I just realized that this is an option that I did not mention. Would it be difficult to call the company to redo the documents to include paying off my debt?
Harry says
Evelyn – What documents are they? If they are the disclosures at the beginning of the process, it’s possible to change your requested loan amount. If the loan is already approved and you are ready to close, it may be too late. Doesn’t hurt to ask the loan officer or broker though.
Evelyn says
Harry, thank you for responding. I hope its not too late. The forms are: Mortgage Loan Rate Lock Policy, Underwriting Approval Conditions, Approval of Mortgage Financing Notice of Mortgage Commitment, Information Disclosure Authorizations, Credit Inquiry/New Credit Affidavit, Servicing Disclosure Statement, SSN Verfication, Request of Transcript of Tax Return, Uniform Residential Loan Application, Good Faith Estimate,Provider of Service Addendum, and Trut-in-Lending Disclosure Statement. The forms are the first documents I received regarding the refinance.
Harry says
Not too late yet.
mindy says
My loan just got funded but the disbursements do not add up to my loan amount. There is a difference of about 750.00 owed to me as far as can tell. I have contacted the new lender and they are looking into it but at the same time they are stating this is a courtesy and they are trying to negotiate the figure. The figure is the figure as far as I am concerned all checks and payoffs should add up to the amount of the loan I am responsible for right? Am I missing something?
Victor says
My refinance loan got closed two weeks ago but it didn’t get funded for no apparent reason. Am I correct that I don’t have to make payments on the new loan since it didn’t get funded? (I am still making payments on my old loan). Thank you!
Bill says
… i’ve read that many people recommend closing near the end of the month to minimze your pre-paid interest costs for a refinance, but if your current payment (last months interest + next months principal) is more interest than principal, it would seem that closing earlier in the month would make more sense. Am I looking at thinks backwards somehow?
Harry says
Bill – Although closing near the end of the month will lower the prepaid interest paid at the time of closing, it only means a higher payoff amount paid out of the new loan. One way or the other you will have to pay one month worth of interest, with a couple of days of overlap. Since when you refinance, you are usually refinancing to a lower rate, the sooner you start paying the lower rate the better. There’s no reason to delay it to near the end of the month or if you already at the end of the month, to delay it to the beginning of the next month.
Clyde Roe says
Is there any reason why we should not sign the refi mortgage papers on a Saturday in the state of CA?
Harry says
Clyde – The order of preference is Tue/Wed > Thu > Fri >> Mon. Saturday would be between Friday and Monday. It’s the second worst, only a little better than signing on Monday.
Boshyd says
In the situation where we pick Tuesday, why does the new loan get funded on Monday instead of Saturday? Banks don’t issue funds on Saturday is it?
Harry says
Correct. Even though some bank branches open on Saturdays, Saturday is not a business day for banks. Transactions done at a branch on a Saturday get Monday’s date.
Rachael says
Not sure you can even help me with this but….
My sister recently refinanced ($250,000) but the 1st mortgage ($250,000) never got paid off. The mortgage broker and Title company are nowhere to be found. How can this even happen? Is she responsible for $500,000 now? If the deed from the 1st lender was never sent to the new lender is she still held accountable?
indexfundfan says
In all my refinance experiences, the date of signing does not really matter. I try to sign as early as possible or at a date/time convenient to me, and then I would request the title company to fund the loan on a specific date.
So even if you sign on a Monday, just tell the title company that you want funding to take place only on the following Monday. From my experience, they are happy to comply (do check that it is not beyond the rate lock date).
coolwater says
I am closing next Friday. I have not seen any closing document yet. Do I get to review the closing document a couple days before? Also, my lender located in different state. How do we sign papers? I need your help. Thanks!
JR says
I have an offer for a lender I already have loan with. I’m refinancing and the rate is 4.175 for 20 years with no prepayment penalty and will be closing within 20 days according to them. I had another application with a local bank that is quoting me 3.89 on the same loan for 20 years.
The local bank is pretty conservative and taking a bit longer to process the loan.
the question is the following:
since there is no prepayment penalty on either loan. Can I allow the closing on the 4.175 and say, after a few weeks, which is when I think the local bank will answer back, if it goes thru with them, close with the local bank and inform them of the other bank transaction?
Both pulled my credit, local bank first, 4.175 bank second. I did inform the 4.175 bank that I checked with my local bank and urged to offer me the best rate they can.
Thanks for your response in advance. Hopefully i’m not confusing anyone.
I essentially don’t want to loose the refinancing on the 4.175, but want to also take advantage of the local 3.89 rate if that one goes thru. Again, they are very conservative, so the second loan is questionable.
Mike says
Refi’s are not cheap. Also, everyone you refi, they pull full credit report and it will show loans in progress. Too many enquiries are always treated with suspicion by all. So it could affect your credit rating.
Additionally, refi’s are very difficult and long to go thru theSe days. They also have clauses which restrict refi with 6 months sometimes. So check on the same.
Best is to refi with the lowest rate lender. You can always get the rates locked with the bank that offered better rates. This will reduce both your cost and headaches. There are items such as appraisal that you will need to pay by yourself … each lender need appraisal done specifically for them. They will not use any other appraisal. Thus you will waste both money and time.
Good luck.
Joe says
I have a refinance with cashout when will I receive cash out proceeds
Harry Sit says
You get it from the settlement agent at the same time when the old loan is paid off
Amber says
Question: I just found this and had no idea it even mattered when you sign docs. We signed loan docs with a notary 2/2/15. Loan was set to close on Friday. However, I had continued to check online to see that our previous loan had been paid off. After seeing that on Monday 2/9/15 our loan still had not paid off to our previous lender I emailed our closing coordinator and she told me that the payoff statement had expired on 2/9/15 and they were requesting another one. She then emailed me the next day stating that our lender has a waiting period for pay off statements of 5-7 days because they are “backed up” right now. I am not sure how all of this works and if our new loan was funded or not? Are we paying interest on both since the new loan was technically supposed to fund on 2/6/15? Thanks so much for the advice!
Harry Sit says
Ask your closing coordinator whether the new loan was funded. Only they know. If it was already funded, you pay interest on both loans until the old loan is paid off.
Larry Cohen says
Harry: thank you for your sage advice! Quick question: my refi was supposedly “funded” this past friday… I assume that means the money from my new lender was wired to escrow. Per your timeline, I assume funds will be send to my old lender or Monday along with escrow paying my back property taxes that were required to be paid, and other funds required to be disbursed via escrow. Would the net loan proceeds be also sent to me on Monday?? Last question: when would the new deed be recorded at the County Registrar Recorder? thank you in advance for your reply.
Harry Sit says
If you read the timeline you see outgoing payments and recording are done on the next business day after funding. If you want to make sure it happens, call your escrow agent. You are already paying double interest over the weekend.
Daniel says
I have a question regarding a refi with cash out:
04/06 Signed documents
04/09 End of wait period
04/16 Sent email to Broker asking when loan would fund
04/17 Response – next week
04/23 Sent email to Broker asking why loan had not been funded
04/24 Response -We have a funding line limit. Due to the high volume of loans closing at the same time, we are waiting for room on the funding line to open up.
I feel like I’m getting the run around from the Broker and the bank will not give me any information on who I can discuss the problem with. Help!
Any guidance on how to proced will truly be appreciated.
Thanks,
Dan
Cathy says
We were approved for a cash out refi of our VA loan on 3/31/2015 by an online broker. We were told we could skip 2 mtg payments, specifically May and June. By the first week of May, we still didn’t have a closing date, even though we provided everything they said they needed within hours of their requests. In fact, they had everything they needed to process our loan within the first week of April. By the first week of May we were concerned that we would be charged a late fee and that a late mtg payment would hit our credit, so we asked the broker if we should pay it or not. Our processor didn’t bother to answer but our account manager said, “hold off” because it wouldn’t be reported as long as the old loan was paid off in May. Later, our processor said, “You can pay it if you want to avoid the late fee, but your loan will close in May so they won’t have anything to report.” We reasoned that a $65 late fee was cheaper than paying the whole mtg and since we now felt confident that we wouldn’t be 30 days late, we didn’t pay it. After nearly two months of hell, we were finally given a “closing date” and a mobile notary was scheduled during the week of the 18th of May. During that same week, my husband and I used some of our tax refund and paid off two debts to avoid accrued interest ( one of those 12 month same as cash deals). I rushed home from work for the signing and was greeted by my husband who was on the phone with the broker. Apparently, there was one last stipulation that had not been approved by underwriting. They waited until the scheduled closing day to tell us that the underwriter wasn’t “comfortable” signing off on some additional income which we had initially been told wasn’t even needed. This extra income now needed to be included in order to make our LTV work but they were telling us this on the day we were supposed to close! No one mentioned an alternative to the additional income (LIKE REDUCING THE DEBT) which we had done already. The underwriter escalated the decision to his supervisor and this was the height of the hell this broker put us thru, because now, we were facing the holiday weekend. We waited patiently for the holiday to roll by and expected prompt action the following Tuesday. Nothing. They finally got an approval from underwriting and scheduled a second closing appointment for Wednesday, 5/27. By this time, it was clear to us that we would not close in May. They told us we needed to make the May mtg payment PRIOR TO the closing appointment that evening. So we did…paid a fee to make a same day payment over the phone, so now we have been assessed a late payment fee and a transaction fee, plus we had to make a payment we were told we wouldn’t need to make. We signed the paperwork on 5/27 and received an email today (6/4) that our loan has funded. When I asked when we could expect to see the proceeds in our account, we were told Monday (6/8) afternoon. What a nightmare!!!! Is this typical for a cash out refi???? Are we – or will we be paying interest on two mortgages????
Harry Sit says
Not typical but as a rule, always pay your existing mortgage as usual before it’s paid off. Any excess will come back to you anyway. Log in to your old mortgage account and verify it’s paid off. Between the date the new loan is funded and the date the old loan is paid off, you always pay interest on two loans. The question is only for how long.
Cathy says
Thank you! Yes, lesson learned. We wondered why they would tell us not to pay it, but instead blindly followed their advice, believing they knew better. We should have trusted our instincts. Thanks again.
Janne says
We closed and we are close to taxes and insurance being due so those were rolled into our refi. My current escrow has money in it. Do you know, typically, how long after closing and funding it takes to get money from old escrow? I was told it would not roll into the new since money for taxes and insurance was part of the refi.
Thank you.
Harry Sit says
Within 30 days.
Mark says
We have an FHA being refinanced to conventional. For several reasons, not caused by us, but all appraisal errors, title and bank related delays we probably will not close until Friday 9.25 or Monday 9.28.15. You calendar is tell me that funding and payout will not happen until after 10.1.15. As our FHA was closed in May 2011 I am not pleased to think that we will owe an additional full month of interest. I would like to be wrong. Your opinion and is there anything I can do? Thank you for your help.
Harry Sit says
Push for an earlier closing date. Tell all parties you are running against an end-of-month payoff and if it’s delayed to 10/1 you will ask them to reimburse you the 1-month interest. Tell them otherwise you will rescind if closing is delayed to 9/25 or 9/28.
Mark says
Thank you. I have more to loose if I they call my bluff on rescinding as I locked into a lower interest rate than currently available. I will however request reimbursement from the appraiser for the delay. We had an issue because he relied on MLS information instead of calling the tax office to verify the obvious error in the MLS information. Thanks again for this information.
Ann says
I found this site to be very informative and a wealth of information from the different scenarios shared by others on their refinance experiences. I, too, have experienced a delay in the closing process. However, I did close on a Wednesday and from reading your advice this was one of the better days to do so. It is good to know there is someone we can go to for answers on the convoluted process of refinancing. I wish that I had done this research beforehand. I now consider myself well informed thanks to your knowledgeable responses. I will recommend this site to others who might be considering a refinance. Thank you.
Ann☺
Cindy says
I did a refinance with a cash out option. The mortgage company are paying off all of our creditors. On the 28th, that was suppose to be the day that all of the bills were suppose to be paid off. Than we did get the extra cash wired to our bank the next day and our original mortgage was paid off. Today is the 1st and so far, none of the bills have been paid off (or posted). How long does it take to see a zero on all my creditors?
ccutiepb979 says
Feeling misled
I was approached by an institution with an offer to refinance my mortgage at a lower interest rate. It sounded good. I was speaking to the agent on the phone during the entire process. Then she later informed me of the day I needed to visit the branch to meet with the lawyers. When I got there it was then that I understood that we were actually closing the deal. I must admit that she walked me through the agreement as best as she could after which I asked her if we had to sign on that day. I told her I would prefer it be done at the end of the month. She explained that if I did the interest would be higher. She also asked me about my property tax which was due in July. I told her it was not paid as yet. She told me I needed to take care of that right away. I again asked if the entire process could not wait until the end of the month. I felt there was an unexplained urgency. Shed insisted it had to be done that day. To date I have not paid the property tax I would be doing so at the end of the month. From what I am told the mortgage is not registered. I was also told that the payoff has already been done. I feel like rethinking the deal. Is it too late since I have already signed.?
prop says
She’s quick unlike others. Whats the company name? Id like to use them as it beats others who sit on the loan and not close it.
ccutiepb979 says
oh by the way that day was a Friday. The Monday after that was a bank holiday.
Pam says
Is it legal for a mortgage company to fund a loan a day later than they told you it would fund?
Harry Sit says
Yes it’s legal. You are not charged interest until it funds.
Confused says
what happens if we signed all documents and during the 3 day window my last mortgage payment shows up rejected by the bank?
Will we just get billed for PO shortage, or will the new lender stop the closing process?
Harry Sit says
Ask the bank that rejected your payment?
Joe says
Mortgage guy says ok to be past 15 day due date as long as it’s not 30…won’t be reported to credit bureau. Mortgage is then paid off and new payment isn’t for a month … Essentially a free month….is this wise or should I just pay the mortgage the same month I close my refi.
Harry Sit says
Just pay as usual. That way you avoid any problems in case your refi hits a snag. Whatever you don’t pay is added to your new loan. It’s not going to be free.
Ron says
Hello, what a great string of information! I have a question relating to a refi we did and took cash out as well as debt paid off.
we closed on Wednesday 11/23 and the company said the funding would happen the 29th I still show our debt (credit cards/loans) NOT paid off? how long does that usually take?
Thank you
Harry Sit says
As the table shows, the payoff happens one or two business days after the loan funding, depending on whether the payoff is done by wire or by a FedEx’d check. The creditor may still take another day to update its online system showing that the payoff happened on the previous day.
michael says
I have a couple questions about a refinance we just did, we started by working with two lenders both with the same rate, just one with a much higher lender credit, the lender with the higher credit seem to be dragging their feet so we signed with the other lender, on the last day of the 3 day right to change our mind, the second lender called and said everything was ready, we sent the notice to the first lender that day, they paid off the loan the day after the 3 day wait, the second lender wants us to sign closing DOCs today and with notary of Fri, first lender $3000 credit Already signed second lender $13000 credit, I called the former lender and they said they do not return payoffs, the first lender is asking us to stay, we are so confused
Charles Mcghee says
At the beginning of the refi process I was told there wouldn’t be any closing cost. Afterward told loan approved by Loan depot. I was told there was now a $3,577 closing cost. Didn’t have all funds available was told a relative could gift me the cost, relative agreed. I’m now told relative must send account number along with account balance. With the hacking world we live in relative fund have been deposited in my bank but relative doesn’t want to give account number to loan depot is this a valid reason to dis-approve?
GinaRenee says
I see this is an old post but I’m desperately searching for answers to a recent refi. We refi’d our house to help pay for taxes we owed for 2017. We paid $3k to IRS and had a remaining balance of $13xxx left to pay. We indicated to refi company that we needed to close and be funded by 4/17/18 so we could pay off our taxes, well one thing led to another and it didn’t work out. We didn’t close till a month later at which point they indicated they had to withhold our FULL tax amount owed to IRS (not taking out the $3k we already paid because IRS hadn’t processed payments yet). We DONT have a lien against our property for the taxes owed, and had they provided this amount in the refi I would be paying off the dang taxes owed already. Anyways.. now they are willing to pay the $13xxx amount owed for sure and still withhold the $3k so I don’t continue to accrue penalties and interest and will pay whatever is left once final tax payoff rec’d from IRS. My question is.. is this normal? I can’t find anything saying this is a normal practice for a refi. I surely can’t be the only one who this has happened to. Also, when I requested how they’d provide proof of paying the $13xxx they don’t have an answer for me, so how can they even pay my taxes for me… what if this goes just randomly into IRS space and IRS says the funds were never rec’d? Who’s liable at that point? Hopefully someone can help me or guide me with some kind of info.
RichardB says
I refinanced my house to pay off some CreditCard debt. The disclosure doc shows that a check made out to a CreditCard company is made out for more than I owe. Will that CreditCard company send me a check for the difference? Or give my credit on future charges?
I rather get a check for the difference.
Harry Sit says
After the payment is posted, call the credit card company and request a refund of the credit balance.
Michelle Meals says
We did a refi. On our home on Feb. 6 and the lender and the title company we went through said our right to rescission was until Mon. Feb.11 because it 3 business days and the funds were released tuesday. When we went to give a voided check for the title company to wire our money to us the check amount was different and she said he said (as in our lender said) he gave us a revised copy of the closing disclosure and he did not so she gave us one but we have our signed documents and now the numbers dont match he changed them. Are they allowed to change any numbers after the signing and what do or can we do?
Catherine says
Our mortgage refi is now in the 3 day right to cancel. If we want to make a change on the payout, can we do that without starting all over; with an addendum or such?
Sharyn B says
I took out a refi that ended with a 4 day overlap! I signed on 1/15/20 (Wed) and the loan funded on Tuesday 1/21/20 (Monday was MLK holiday). At signing, the mobile notary said the payoff funds would be wired out on Thursday, 1/23/20. I was not happy but I am in Hawaii (moved here last year) and thought maybe it was due to the time difference, as the prior lender’s servicer is in Illinois.
The payoff was not wired out until Friday. I asked them why they missed the deadline and received all sorts of excuses. First, it was because of a scanning error in the loan package that resulted in covering up the amount of the payoff. They are up against a 10 am wire deadline. The next day, when I spoke to another agent, she claimed there was nothing wrong with the paperwork but they only had 2 hours and 15 files to process and mine did not make it in time for the wire cutoff. Fortunately, the prior lender did process the payoff on Friday and closed out the loan. Because the wire was a day late, the amount was short (obviously). I did have an escrow for taxes and insurance so they satisfied the payoff that way. I am not sure that was kosher, but it was preferable to having a shortage existing over the weekend, with additional interest being paid.
The title company refused to take responsibility for the late payment and said the previous lender was to blame.
Any suggestions?
Shaun Brown says
I recently refinance my home mortage. I received my closing statement and recevieve a small refund. The old loan was paid off.
I reached out to my broker to receive the new payment information on the loan (which bank to pay) and they told me that the loan is not finanalized and that I should pay them (the broker) the 1st month payment until the loan is finalized. Is this normal?
Thank you,
Harry Sit says
That’s not normal. Your closing paperwork should show which bank is funding your new loan. It may also include the loan number and a payment coupon for your first payment. If not, you can contact the bank and ask for that information.
Newbie says
I’m in the process of refinancing my mortgage to a lower rate/monthly payment and set to closed on April 23rd. Appraisal and all documents are submitted per request after conditionally approved on new loan. I am going through with my initial lender. I just paid this month mortgage to the bank and my homeowner insurance premium will expired this month which I told them to cancelled it after the expired date (this month) and went with a lower premium policy which they stated they will coordinate with my lender. I guess, is there anything I should look out for and etc? Very new to this so I want to make sure I am on the right track. Thanks in advance.