Some Free Advice on Mortgage Refinancing
My husband and I have finally–after nearly six months of trying–completed a home mortgage refinance. Our first attempt, through Quicken Loans, ended with my reporting the company to the State Attorney General’s Mortgage Fraud Division for trying to force us into borrowing about $20,000 more than we requested. (Will these bankers never learn?!?) This current attempt, which blissfully just succeeded, was through Wells Fargo. It was an excruciating process during which I had to, among other things, arrange a conference call between supervisors at both Wells Fargo and Coldwell Banker–two of the biggest banks in the world–because Wells Fargo kept trying to inflate our current mortgage payoff amount by several thousand dollars.
I learned a few things during this ordeal that might be of use to you during a refinance attempt of your own. They all deal with the settlement statement that the federal Housing and Urban Development Office requires the bank to send for your review prior to closing. This HUD statement contains no fewer than 1,400 lines of fees and charges. I forced Wells Fargo to go over every last one of them with me, and we ended up saving thousands of dollars in fees.
Here are three biggies for your future reference:
- Line 901, Interest on Mortgage. It took me four phone calls to figure this one out, because it’s actually the title company and not your bank that provides this number. Apparently, it is standard practice to charge homeowners for three days’ worth of mortgage interest beyond the actual closing date of the mortgage refinance, just in case the homeowner invokes the federal recission period and cancels the deal. Fair enough. But what I learned is that it is also standard practice to charge homeowners another seven to 10 days’ worth of mortgage interest on top of those three days–just in case your new bank fails to give the current mortgage payoff money to your old bank in a timely manner. You read that correctly: Wells Fargo, a multibillion-dollar bank, tried to force us to pay more than a week’s worth of extra mortgage interest just in case it screwed things up on its end. To get this fee removed, I had to argue with the title company, not Wells Fargo.
- Line 1001, Hazard Insurance. This is the line that details how much money the bank wants to collect as escrow to pay your homeowner’s insurance in the future. In our case, Wells Fargo wanted eight months’ worth of money–for a policy that was already paid in full through the end of April 2010. Yes, the bank was trying to force us to pay up front for a year and a half’s worth of homeowners’ insurance. Absolutely crazy. My arguing this point saved us more than $1,000 in fees at the closing.
- Line 1108, Title Insurance. When you begin the refinance process, the bank’s salesman will give you a Good Faith Estimate of fees. One is title insurance, which, in our state of New Jersey, can run close to $2,000. What the bank does not tell you is that during a refinance, you are not required to pay for the normal title insurance. You instead should be eligible for a title reissue fee. The difference in price, for us, was more than $800 saved at closing–savings we would not have seen if I had not asked specifically about that HUD settlement line.
I lost at least 24 hours of my life to phone calls trying to straighten this stuff out. Hopefully, my time lost will be to your financial gain should you attempt a home mortgage refinance of your own.