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Old 11-29-2012, 10:02 AM
 
Location: Murfreesboro, TN
763 posts, read 2,199,863 times
Reputation: 705

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Hubby and I are about 4 weeks away from finishing our new home. As expected with most new construction, we have gone just a tad above our budget/construction loan (about 5% over, not bad at all!) and will need to use money from savings to finish construction as per the agreement with the bank. Unfortunately, after we pay closing costs for the end loan we will be basically cash poor - a situation we are EXTREMELY uncomfortable with.

We've spoken with the mortage officer at the locally owned bank where we have our construction loan about getting cash back when we close on the final mortgage and pay off the const. loan. We are in a very good equity position and even cashing out enough to cover the closing costs and replenish our savings will still put us at a 35% LTV so no worries there. The bank, however, insists that there is a mandatory 1% fee for all cash-out refi's which is a good chuck of change for the amount we are looking to get back. This is our 'forever' home and we don't plan on selling until we have to head to the old folks home in about 40 years so getting this right the first time is fairly important.

Is this cash-out fee standard across the board? Even after the financial meltdown I still see people posting about cash-out refinancing but never anything about a 1% fee for doing so! Hubby will be speaking with a couple different mortgage companies today so compare rates, closing costs, etc. but I thought I'd throw this out here in the meantime!

Thanks!
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Old 11-29-2012, 11:45 AM
 
Location: Plano, Texas
1,676 posts, read 6,308,098 times
Reputation: 684
You are receiving bad information. There is no mandatory charge for a home equity loan. This bank might have one, but not across the board.
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Old 11-29-2012, 12:11 PM
 
Location: New York
2,251 posts, read 4,131,870 times
Reputation: 1607
Quote:
Originally Posted by VictorBurek View Post
You are receiving bad information. There is no mandatory charge for a home equity loan. This bank might have one, but not across the board.

Agree with Victor, you are going to have to shop around

Look at larger banks like - https://www.wellsfargo.com/equity/

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Old 11-29-2012, 05:21 PM
 
Location: Murfreesboro, TN
763 posts, read 2,199,863 times
Reputation: 705
Thank you! I kinda thought that was the case - this is a small local bank but the best one to work with for residential construction loans. No formal draw schedule or waiting a week between draw request and getting the money. When we need it we just call up our contact who is also the bank VP and he drives out to visually inspect progress and BAM - and we have cash the same day.

I do just want to clarify that we're not getting a home equity loan - we have what is basically an adjustible rate mortgage with a set end date that we need to refinance to a fixed rate mortgage taking cash out when we close. For example - say our construction loan is for $350,000 but we spent $370,000 total on the build, using $20,000 of our own money. We want to get the end loan/refinance for $370,000, pay off the construction mortgage and use the cash leftover for closing costs and to replinish our savings. You guys are saying there's no mandatory 1% fee for doing that?

I wll have hubby look at national banks, too! Our last mortgage was with Wells Fargo and we had zero problems with them but that was 9 years ago...
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