Posted on: 19th Oct, 2010 11:15 pm
just bought my first home about a year ago. rates have since dropped and i'm going to refinance. got quotes from a couple companies and the one listed below seems to have the best interest rate (4.125 on 30 year fixed). the problem is the apr seems high (4.700). i called and asked about it and the person working on my loan advised me that the gfe/til documents are drawn up based on worst case scenario (ie. taxes due immediately, 24 months of mortgage insurance due up front instead of paid monthly, 30 days of prepaid interest, etc). she said our apr should be closer to 4.195% or something below 4.200%
is this a bunch of hog wash or is this normal for a gfe/til statement to show a higher apr initially and then come down for actual closing? below is the gfe/til, i'd appreciate your help in knowing if this is a good deal or someone trying to pull the wool over my eyes! i'm happy with the interest rate, just not the apr.
thanks for any help!
[img:2941d8bc1f]http://i571.photobucket.com/albums/ss155/rdiggidy/refinance/yetter_til_2010_1.jpg[/img:2941d8bc1f]
[img:2941d8bc1f]http://i571.photobucket.com/albums/ss155/rdiggidy/refinance/yetter_til_2010_2.jpg[/img:2941d8bc1f]
[img:2941d8bc1f]http://i571.photobucket.com/albums/ss155/rdiggidy/refinance/yetter_til_2010_3.jpg[/img:2941d8bc1f]
[img:2941d8bc1f]http://i571.photobucket.com/albums/ss155/rdiggidy/refinance/yetter_til_2010_4.jpg[/img:2941d8bc1f]
[img:2941d8bc1f]http://i571.photobucket.com/albums/ss155/rdiggidy/refinance/yetter_til_2010_5.jpg[/img:2941d8bc1f]
[img:2941d8bc1f]http://i571.photobucket.com/albums/ss155/rdiggidy/refinance/yetter_til_2010_6.jpg[/img:2941d8bc1f]
is this a bunch of hog wash or is this normal for a gfe/til statement to show a higher apr initially and then come down for actual closing? below is the gfe/til, i'd appreciate your help in knowing if this is a good deal or someone trying to pull the wool over my eyes! i'm happy with the interest rate, just not the apr.
thanks for any help!
[img:2941d8bc1f]http://i571.photobucket.com/albums/ss155/rdiggidy/refinance/yetter_til_2010_1.jpg[/img:2941d8bc1f]
[img:2941d8bc1f]http://i571.photobucket.com/albums/ss155/rdiggidy/refinance/yetter_til_2010_2.jpg[/img:2941d8bc1f]
[img:2941d8bc1f]http://i571.photobucket.com/albums/ss155/rdiggidy/refinance/yetter_til_2010_3.jpg[/img:2941d8bc1f]
[img:2941d8bc1f]http://i571.photobucket.com/albums/ss155/rdiggidy/refinance/yetter_til_2010_4.jpg[/img:2941d8bc1f]
[img:2941d8bc1f]http://i571.photobucket.com/albums/ss155/rdiggidy/refinance/yetter_til_2010_5.jpg[/img:2941d8bc1f]
[img:2941d8bc1f]http://i571.photobucket.com/albums/ss155/rdiggidy/refinance/yetter_til_2010_6.jpg[/img:2941d8bc1f]
Here are few things that look off/odd to me.
1) 30 days prepaid interest - Unless you want to skip 2 months on your mortgage payment there isn't any reason for this.
2) The lender is showing that your home owner's insurance will be pre-paid for the year but is also collecting an additional 6 months for your escrow account - this should be 2-3 months.
3) The lender is collecting 24 months for PMI or private mortgage insurance - I have never seen this done on a loan. This means you're going to pay interest on that money for the entire time that you have this loan.
4) The lender is showing that you are paying a discount fee or point for this rate which is really what you're paying to lender for their origination fee on top of what they're going to make on the back end for that rate which will range from .6% to 1.625% depending on who the end investor is.
This is one of the problems of working with a direct lender. They are not required to fully disclose what they make on a loan the way a broker does.
The banks are not required to disclose what they will make on a loan for the interest rate they sell to a borrower but a broker does.
1) 30 days prepaid interest - Unless you want to skip 2 months on your mortgage payment there isn't any reason for this.
2) The lender is showing that your home owner's insurance will be pre-paid for the year but is also collecting an additional 6 months for your escrow account - this should be 2-3 months.
3) The lender is collecting 24 months for PMI or private mortgage insurance - I have never seen this done on a loan. This means you're going to pay interest on that money for the entire time that you have this loan.
4) The lender is showing that you are paying a discount fee or point for this rate which is really what you're paying to lender for their origination fee on top of what they're going to make on the back end for that rate which will range from .6% to 1.625% depending on who the end investor is.
This is one of the problems of working with a direct lender. They are not required to fully disclose what they make on a loan the way a broker does.
The banks are not required to disclose what they will make on a loan for the interest rate they sell to a borrower but a broker does.
Thanks for the reply & information!!
I called and talked to the lender again. She stated that the the Federal government requires the disclosure of 2 years of PMI costs (since it will have to pe paid, though not necessarily all at once). She says this is the law and anyone not doing this is breaking the law. She also advised me that this is not the actual amount of my PMI insurance (it we be calculated after the appraisel is done), and the PMI will not be paid up front, it will be paid monthly. Again she stated the reason it is listed for 24 months is because it is required to be on the TIL forms per Federal Law. She again stated my APR would be lower because PMI will not be paid up front, but instead billed monthly.
Is this in fact law? Is the cost of 24 months of PMI suppose to be shown on the TIL statement?
I called and talked to the lender again. She stated that the the Federal government requires the disclosure of 2 years of PMI costs (since it will have to pe paid, though not necessarily all at once). She says this is the law and anyone not doing this is breaking the law. She also advised me that this is not the actual amount of my PMI insurance (it we be calculated after the appraisel is done), and the PMI will not be paid up front, it will be paid monthly. Again she stated the reason it is listed for 24 months is because it is required to be on the TIL forms per Federal Law. She again stated my APR would be lower because PMI will not be paid up front, but instead billed monthly.
Is this in fact law? Is the cost of 24 months of PMI suppose to be shown on the TIL statement?
Hi Ryanyetter,
This person is outright lying to you. There are some obvious issues here.
1)She disclosed on page 2 of the GFE that you will be required to pay 24 months of mortgage insurance upfront which increases your closing costs but now she says that you do not have to pay it upfront but you will pay it monthly.
2) She has marked the box on the TIL that the loan REQUIRES a deposit but the deposit is not included in your annual percentage rate. This backs up the fact that she charged you for it on the GFE.
3) She is collecting 30 days of interest - You should pay about 5 days tops.
4) She is showing that you will have to escrow 6 months of your home owner's insurance when it should be 2 or 3 months.
All of this tells me that she is padding the estimate for you closing costs so later she can move some fees around but the total closing costs stays the same.
I would be more than happy to give you an estimate to compare.
This person is outright lying to you. There are some obvious issues here.
1)She disclosed on page 2 of the GFE that you will be required to pay 24 months of mortgage insurance upfront which increases your closing costs but now she says that you do not have to pay it upfront but you will pay it monthly.
2) She has marked the box on the TIL that the loan REQUIRES a deposit but the deposit is not included in your annual percentage rate. This backs up the fact that she charged you for it on the GFE.
3) She is collecting 30 days of interest - You should pay about 5 days tops.
4) She is showing that you will have to escrow 6 months of your home owner's insurance when it should be 2 or 3 months.
All of this tells me that she is padding the estimate for you closing costs so later she can move some fees around but the total closing costs stays the same.
I would be more than happy to give you an estimate to compare.
John,
How shall I contact you/where should I fill out an application?
Feel free to email me:ryanyetter@gmail.com
How shall I contact you/where should I fill out an application?
Feel free to email me:ryanyetter@gmail.com
What a hodge podge but it all boils down to run, dont walk, unless yore far down the line with this application.
LO has The Homeowners Protection Act of 1998 (the as she calls it) and Fannie seasoning position (2 years but relating to LTV 99-06) all mixed up. No way is you APR getting down to œcloser to 4.195% unless you ELIMINATED monthly MI and add back the 24 months to Amount Financed; youll get close though using Encompasss unique handling of 30 days interim interest. I get an APR of 4.57% increasing amount financed by the 24 erroneous months up upfront MI. Appears for automatic MI cancellation month ye going 85% LTV but MI seems a bit high perhaps a CA deal.
Guess is that yore dealing with aœjust off the boLO and d get a second company to look at the deal.
LO has The Homeowners Protection Act of 1998 (the as she calls it) and Fannie seasoning position (2 years but relating to LTV 99-06) all mixed up. No way is you APR getting down to œcloser to 4.195% unless you ELIMINATED monthly MI and add back the 24 months to Amount Financed; youll get close though using Encompasss unique handling of 30 days interim interest. I get an APR of 4.57% increasing amount financed by the 24 erroneous months up upfront MI. Appears for automatic MI cancellation month ye going 85% LTV but MI seems a bit high perhaps a CA deal.
Guess is that yore dealing with aœjust off the boLO and d get a second company to look at the deal.