Refinance closing cost question

[HeXen]

Wife and me work late and she's been dealing with bank over our refinancing but apparently she doesn't ask the right questions as I'm filled with them each time I get updated but I never get home in time to call.

So their saying to us that our closing cost is just over $1000 and that they will give us $700 of that money back within 2 weeks. Has to be cash or check, no CC which is fine but what's the point of us giving them $700 to begin with? What are they doing with $700 just to turn around and give it back to us in two weeks?

Anyone have an idea of what that's about? I told her to email them and make sure we get that in writing or some legal documentation over email as our time limit is Oct 25 afterwhich interest goes up so no time for paper. We have the original email stating we would get that money back but I want something with a signature on it.

The bank is our current mortgage lender which is Suntrust bank. So it's not one of those oddball places or anything, I would normally trust a typical bank but this deal just doesn't seem logical to me.

 

[fstime]

It does sound a little silly, but if you come out the end of the day with only $300 in closing costs, that is a pretty sweet deal.

I would just get it in writing like you said, if you say it also states so on the original email, I would not worry too much.

You said your self that you don't feel it is a shady business and you have dealt with them in the past.

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The bank is probably giving you this deal because you are refinancing internally, meaning, they get to keep you as a customer for the next 15 or 30 years. They made much, much, much more than that $700 in interest on your old loan and will do so on new loan as well.

 

[spacejamz]

Your Good Faith Estimate should detail all of your closing costs. It should have the total closing costs as well as the breakdown of the all the items owed by you.

The number you are looking for should be in there somewhere...

 

[HeXen]

It does sound a little silly, but if you come out the end of the day with only $300 in closing costs, that is a pretty sweet deal.

I would just get it in writing like you said, if you say it also states so on the original email, I would not worry too much.

You said your self that you don't feel it is a shady business and you have dealt with them in the past.

-------------------------

The bank is probably giving you this deal because you are refinancing internally, meaning, they get to keep you as a customer for the next 15 or 30 years. They made much, much, much more than that $700 in interest on your old loan and will do so on new loan as well.

I guess, just seems odd. I don't trust any bank to not try something shady, I mean look at the economy the past few years and all the shady things banks did to file paperwork in foreclosing homes.

Someone at that bank has to be getting some sort of bonus for each close, I just want to make sure it's a legit and standard bonus and not me getting a bonerus

Your Good Faith Estimate should detail all of your closing costs. It should have the total closing costs as well as the breakdown of the all the items owed by you.

The number you are looking for should be in there somewhere...

Well see first we were told the total closing cost would be $512.00. That's when we signed and performed all the tasks they wanted, nothing there I can recall states the closing cost. Then we were transferred to deal with this other guy, he said suddenly it's $1600 + and tried to setup a closing date quickly, which we didn't confirm but someone showed up at our house the day he wanted us to close.
Then we get an email saying it's like $1024 and we would get $700 back.

So yeah, I need to go back and find copies of all the original papers we signed, but I don't think closing cost was on there. Most of that was for like letting them do the credit check...etc.

 

[fstime]

I guess, just seems odd. I don't trust any bank to not try something shady, I mean look at the economy the past few years and all the shady things banks did to file paperwork in foreclosing homes.

Someone at that bank has to be getting some sort of bonus for each close, I just want to make sure it's a legit and standard bonus and not me getting a bonerus

Of course, the branch most likely has a target number they have to reach each quarter in mortgage loans which along with other targets determines their bonuses.

 

[Vdubchaos]

If it's not on paper, I wouldn't trust it/would assume NOTHING.

 

[HeXen]

ok. I looked at the papers they sent and found the GFE. Never trust a woman to comprehend this stuff apparently. She thought it was copies of what we signed but it's the amendments they made. It's saying something different than the emails. Total cost says 1,265.21 and no where does it say we get back anything.
Email says $1024.12 and we get $700 from escrow...so that part makes more sense since it's coming from escrow but I still want it in writing the day we close.

They make it confusing cause we have 2 different people that keep leaving us messages and email and changing things from what this paperwork is saying

 

[spacejamz]

ok. I looked at the papers they sent and found the GFE. Never trust a woman to comprehend this stuff apparently. She thought it was copies of what we signed but it's the amendments they made. It's saying something different than the emails. Total cost says 1,265.21 and no where does it say we get back anything.
Email says $1024.12 and we get $700 from escrow...so that part makes more sense since it's coming from escrow but I still want it in writing the day we close.

They make it confusing cause we have 2 different people that keep leaving us messages and email and changing things from what this paperwork is saying

How are you getting back $700 from escrow? Was your previous mortgage escrowed and your new one non-escrow?

Your escrow account should not magically have $700 in it...make sure your taxes and home owners insurance are paid...

 

[OutHouse]

ok. I looked at the papers they sent and found the GFE. Never trust a woman to comprehend this stuff apparently. She thought it was copies of what we signed but it's the amendments they made. It's saying something different than the emails. Total cost says 1,265.21 and no where does it say we get back anything.
Email says $1024.12 and we get $700 from escrow...so that part makes more sense since it's coming from escrow but I still want it in writing the day we close.

They make it confusing cause we have 2 different people that keep leaving us messages and email and changing things from what this paperwork is saying

run away. dont look back. sounds shady as hell and nobody works for free.

 

[mikeford]

Far as I can tell "everybody" that makes loans now is a bit shady, but typically within the law.

Your new loan if it has an escrow account to pay property taxes etc., needs to be immediately funded as the loan is funded, but your old loan escrow account has some number of days before they are required to give you any remaining balance. You either roll the amount needed to fund the escrow into the new loan, or come up with the cash at closing.

We just backed out of a new loan with Discover Home loans. Very aggressive and full of promises on the phone to get the process started including a non refundable appraisal fee, and once we were about two weeks into the process things started adding up and on. Finally we told them to forget it and decided to work with our regular bank.

How it works is the Discover Home loans owns half a dozen subsidiary companies like title etc. so they want you using as many as they can, and once in the process almost nothing they claimed at the start they can't change so you pay more.

 

[EagleKeeper]

How are you getting back $700 from escrow? Was your previous mortgage escrowed and your new one non-escrow?

Your escrow account should not magically have $700 in it...make sure your taxes and home owners insurance are paid...

Lender holds the escrow in an account.

Escrow is funded in advance.

New bank collects at time of closing for the required escrow.
Now at this point, there are two escrow accounts.

Old bank, when note is paid off by new bank; closes escrow account and sends check. Either to owner of house or to new bank to close the loop. If check goes to new bank; they then send it on.

That takes about two weeks to get all paperwork coordinated.

 

[Vdubchaos]

Lender holds the escrow in an account.

Escrow is funded in advance.

New bank collects at time of closing for the required escrow.
Now at this point, there are two escrow accounts.

Old bank, when note is paid off by new bank; closes escrow account and sends check. Either to owner of house or to new bank to close the loop. If check goes to new bank; they then send it on.

That takes about two weeks to get all paperwork coordinated.

That's correct

The only thing I see wrong here is that "the lender" is making it seem like you are getting "rebate" of some kind.

When in reality you are just getting back your own money you paid into the escrow.

:biggrin:

Also OP, keep in mind that GFE changes every step of the way as more details are worked out and it will most likely be different the day of closing....but it should be fairly close.

Good indicator of how good of a deal you are getting is APR. Assuming it's withing .25% to .5% of your Interest rate, you are doing fine. Closer to Interest rate the better....

 

[Scarpozzi]

$300 is pretty low....even $1000 seems low. Typically closing costs are X + a percentage of the loan total. If they've decided to waive the percentage that most places charge and aren't charging you points to get a better rate, than you're just paying administrative fees. Since it's a refi, they're likely assuming there's no reason to search for leins at the courthouse (fee), do another appraisal (fee), and may have their own underwriters/lawyers handling the loan internally.

Just be aware that some lenders lump (HIDE) the closing costs of refis into the loan. So you may ultimately be kicking the can down the road and they're only telling you what cash you need to do the deal. You can ask to see it all in writing before closing so there are no surprises.


One thing to note....if your rate goes up for a few weeks or even a month, it won't be the end of the world. If you're currently on an ARM, it may not even go up that much. Most can only increase by 1% or some set limit per year... It would be in the documentation for the original loan.

 

[spacejamz]

Lender holds the escrow in an account.

Escrow is funded in advance.

New bank collects at time of closing for the required escrow.
Now at this point, there are two escrow accounts.

Old bank, when note is paid off by new bank; closes escrow account and sends check. Either to owner of house or to new bank to close the loop. If check goes to new bank; they then send it on.

That takes about two weeks to get all paperwork coordinated.

But shouldn't the GFE include the approximate funds needed in escrow for the new mortgage? They can estimate this based on how much the taxes/premiums and when they are due... If so, it should be close to a wash if they do it properly...

 

[spacejamz]

That's correct

The only thing I see wrong here is that "the lender" is making it seem like you are getting "rebate" of some kind.

When in reality you are just getting back your own money you paid into the escrow.

:biggrin:

Also OP, keep in mind that GFE changes every step of the way as more details are worked out and it will most likely be different the day of closing....but it should be fairly close.

Good indicator of how good of a deal you are getting is APR. Assuming it's withing .25% to .5% of your Interest rate, you are doing fine. Closer to Interest rate the better....

I didn't word my post as clearly as I should have

Chances are that $700 in the old escrow account is for something that is coming due.

However, when he gets his new mortgage, they can estimate how much he needs in escrow when the new loan starts so that his monthly payments are 'normal' and he will have sufficient funds in his escrow account whenever the tax/insurance payment becomes due).

It could also depend on when the item is due in relation to when the old loan is paid off/when the new loan kicks in. The GFE should reflect whether or not these payments will be handled by the seller. If not, the OP needs to make arrangements (which is where that $700 will probably come in)...

 

[Vdubchaos]

$300 is pretty low....even $1000 seems low. Typically closing costs are X + a percentage of the loan total. If they've decided to waive the percentage that most places charge and aren't charging you points to get a better rate, than you're just paying administrative fees. Since it's a refi, they're likely assuming there's no reason to search for leins at the courthouse (fee), do another appraisal (fee), and may have their own underwriters/lawyers handling the loan internally.

Just be aware that some lenders lump (HIDE) the closing costs of refis into the loan. So you may ultimately be kicking the can down the road and they're only telling you what cash you need to do the deal. You can ask to see it all in writing before closing so there are no surprises.


One thing to note....if your rate goes up for a few weeks or even a month, it won't be the end of the world. If you're currently on an ARM, it may not even go up that much. Most can only increase by 1% or some set limit per year... It would be in the documentation for the original loan.

I have one simple solution. DO NOT get ANY adjustable loans......EVER

 

[Scarpozzi]

I have one simple solution. DO NOT get ANY adjustable loans......EVER

The OP suggested that his interest rate was about to increase. I made the assumption he has one.

ARMs aren't bad. It depends on your market, home cost, cash on hand, penalties for paying the loan off early, etc... I had one about 10 years ago that saved me a lot of money over the life of my loan before I paid it off. I was able to save 2 percentage points off market without paying points.

 

[HeXen]

It's not adjustable, we were on 7% and since it's gone down and likely to rise back up I suspect, figured we might as well, we tried to do it a couple years or so back when the market bottomed out but we didn't have enough points? We'll save about $140 each month now, so worth it in the long run. We got 5.25%, dunno how great that is but it's better than what we were stuck with before.

That's correct

The only thing I see wrong here is that "the lender" is making it seem like you are getting "rebate" of some kind.

When in reality you are just getting back your own money you paid into the escrow.

:biggrin:

Also OP, keep in mind that GFE changes every step of the way as more details are worked out and it will most likely be different the day of closing....but it should be fairly close.

Good indicator of how good of a deal you are getting is APR. Assuming it's withing .25% to .5% of your Interest rate, you are doing fine. Closer to Interest rate the better....

I see, it changed again today. Now its only about $960. Hopefully it goes down more by Thursday.

 

[JTsyo]

It's not adjustable, we were on 7% and since it's gone down and likely to rise back up I suspect, figured we might as well, we tried to do it a couple years or so back when the market bottomed out but we didn't have enough points? We'll save about $140 each month now, so worth it in the long run. We got 5.25%, dunno how great that is but it's better than what we were stuck with before.



I see, it changed again today. Now its only about $960. Hopefully it goes down more by Thursday.

Didn't realize rates rose that much, thought it was still around 4%. Did you check with other banks?

 

[postmortemIA]

I didn't word my post as clearly as I should have

Chances are that $700 in the old escrow account is for something that is coming due..

Yes, old escrow balance must be paid in thirty days.