ok, so this is my first re-fi, i should've followed my gut that it was too good to be true.. i just refinanced for no cost to reduce my rate by 1%. i reiterated that "no cost" actually meant "no cost" with the sales guy on the phone and made sure that meant no appraisal, application, closing costs, re tax adjustment, interest adjustment, and points, or any other fee i could think of. they told me... [more]
ok, so this is my first re-fi, i should've followed my gut that it was too good to be true..
i just refinanced for no cost to reduce my rate by 1%. i reiterated that "no cost" actually meant "no cost" with the sales guy on the phone and made sure that meant no appraisal, application, closing costs, re tax adjustment, interest adjustment, and points, or any other fee i could think of. they told me $0 meant $0.
a friend told me this was normal as the bank would rather have you pay lesser interest with them, than no interest at all (if i go with another bank)..
fine and dandy, i receive the closing package, check the HUD $0, check the new principal, and it's up by just a little over 1%..WTF
i understand you can choose to incorporate fees into the life of the loan if fees are involved, but is it normal for the principal to go up in a "no points/fees/cc means NO" scenario?
i only have a couple days to return the package...the bank is wf if anyone's interested, thanks.
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Response by mbrokerNY
almost 17 years ago
Posts: 103
Member since: May 2008
I don't understand, the HUD says you owe $0 or there were $0 in fees listed in total? There is no such thing as a no cc loan, it doesn't exist. WF could care less whether they service your loan or not, it doesn't work like that anymore.
Sounds to me like you should have listened to your gut. What rate did you get?
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Response by hol4
almost 17 years ago
Posts: 710
Member since: Nov 2008
i'm at 5.20% now..i know there's been talk about 4.5%, but that just seemed to be for sporadic days i've missed. HUD says 0$ fees altogether, but payoff amount and principal have been inflated.
spoke to wf rep and she said it's because they add last two payments interest to the principal after the closing application and i MAY be entitled to a refund AFTER the closing..i asked if that were the case (and not points rolled into my principal) shouldn't i be guaranteed repayment of interest adjustment since i paid my last 2 payments that covered said periods while app was in process? she said there's no guarantee, and she was only a sales person and wouldn't be able to project such certainty, surprise..
i thought that my cost was included in the yield spread (lender charges slightly higher than market), but to include points in the new higher principal without any word is downright shady. i had to explain to her that my payments comprise mostly of interest at the time being since my loan is new, so it wouldn't offset my principal amount dollar for dollar..shouldn't she already know this?
here's a guy who gets no cost and same principal balance after refi, though he might be in the uk:
These are more along the lines of loan modifications rather than traditional refinances. In these cases its possible not to incur any costs.
The amount needed to payoff your loan is almost always higher than the balance stated on your mortgage statement which is just your principal balance. The interest on your loan is paid in arrears; when you make your Feb payment you are really paying January's interest. So, when it's time to payoff your loan the lender has to collect that interest. If you close on Feb 15th the bank has to collect the interest from the 15t to the 28th at closing to cover Jan.
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Response by hol4
almost 17 years ago
Posts: 710
Member since: Nov 2008
you're exactly right, i understand they're paid in arrears, not like rent. so they collect last two months payments for previous two cycles before closing, great.
however, during those two cycles i continue paying my mortgage payments, refinance process aside. therefore, AFTER the closing, it doesn't make sense to me how there is still a possibility i might not get reimbursed despite my continual payments, and now new higher principal balance.
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I don't understand, the HUD says you owe $0 or there were $0 in fees listed in total? There is no such thing as a no cc loan, it doesn't exist. WF could care less whether they service your loan or not, it doesn't work like that anymore.
Sounds to me like you should have listened to your gut. What rate did you get?
i'm at 5.20% now..i know there's been talk about 4.5%, but that just seemed to be for sporadic days i've missed. HUD says 0$ fees altogether, but payoff amount and principal have been inflated.
spoke to wf rep and she said it's because they add last two payments interest to the principal after the closing application and i MAY be entitled to a refund AFTER the closing..i asked if that were the case (and not points rolled into my principal) shouldn't i be guaranteed repayment of interest adjustment since i paid my last 2 payments that covered said periods while app was in process? she said there's no guarantee, and she was only a sales person and wouldn't be able to project such certainty, surprise..
i thought that my cost was included in the yield spread (lender charges slightly higher than market), but to include points in the new higher principal without any word is downright shady. i had to explain to her that my payments comprise mostly of interest at the time being since my loan is new, so it wouldn't offset my principal amount dollar for dollar..shouldn't she already know this?
here's a guy who gets no cost and same principal balance after refi, though he might be in the uk:
http://thefinancebuff.com/2008/01/cost-mortgage-refinance-stepping-down.html
These are more along the lines of loan modifications rather than traditional refinances. In these cases its possible not to incur any costs.
The amount needed to payoff your loan is almost always higher than the balance stated on your mortgage statement which is just your principal balance. The interest on your loan is paid in arrears; when you make your Feb payment you are really paying January's interest. So, when it's time to payoff your loan the lender has to collect that interest. If you close on Feb 15th the bank has to collect the interest from the 15t to the 28th at closing to cover Jan.
you're exactly right, i understand they're paid in arrears, not like rent. so they collect last two months payments for previous two cycles before closing, great.
however, during those two cycles i continue paying my mortgage payments, refinance process aside. therefore, AFTER the closing, it doesn't make sense to me how there is still a possibility i might not get reimbursed despite my continual payments, and now new higher principal balance.
bump, ty