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Old 03-23-2009, 05:39 PM
 
Location: Michigan
23 posts, read 177,885 times
Reputation: 23

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Just wanted to give an update on our refinancing process, and see if anyone has had a similar experience:

We just received a call from our broker, in which he stated that it was noted on our appraisal that city sewer is available, but we are not connected (we are on septic). Unfortunately, FHA requires that if city sewer is available, we must connect to it (as long as the cost doesn't exceed 3% of the house's value).

Our broker estimated that it will cost ~$1,500. I plan on calling our public services department tomorrow to get a more accurate figure. Of course, this is probably going to add 6-8 months to our break-even period.

Also, a couple of things our broker stated, that I am hoping someone may be able to shed light on:

1. "Connecting to city sewer will increase our home's value." Is this true? Also, I had asked our broker if the appraiser would be able to revise our appraisal report if we hooked up to sewer; but of course, we'd have to pay for a brand new appraisal. I was hoping at least for some consolation in the fact that maybe our LTV would go down a bit if we hooked up to sewer...

1. a. A bit off-topic, but can amendments be made to appraisals in an instance such as this? It's not like the appraiser would have to come back out and re-appraise our whole house...

2. I asked if there was any way to get around the sewer hookup, and he said "we could try and go for a conventional loan, but it's likely impossible to get one" since we only have an LTV of 92.5% and many lenders are reluctant given the state of the economy.

2. a. Also, a point he brought up is that if we were able to get a conventional loan, we'd be paying $34/mo extra in PMI than with an FHA loan. Correct me if I am wrong, but with a conventional loan we would not have to pay the FHA UFMIP fee of $2,747; therefore, even though we'd be paying $34 extra in PMI/month with a conventional loan, it would take 80 months for that to add up to the FHA UFMIP fee of $2,747? Seems like a long break-even period when looking at PMI-specific aspects of a conventional vs FHA loan.

3. "If we were able to find a lender that would sell a conventional loan, the interest rate would likely be a bit higher." Do FHA loans typically have a lower interest rate than conventional? Right now, he thinks we could be looking in the upper 4's (4.9ish); however, I've never been able to get a solid figure from him.

4. "It doesn't pay to wait on rates going lower at this point, because nothing is a certainty; they could go on the rise at any time. Also, if rates end up dropping a lot lower in the next 6 months or so, we could streamline with an FHA loan, in which closing costs would be about 1/2 of what they are looking to be right now." Sound reasonable?

In talking with him, it seemed like he was promoting the FHA loan quite a bit, even though we'll essentially be paying an extra $1,500 up front to cover the sewer hookup. I do realize that it's probably next to impossible to get a conventional loan given our LTV at this point, so I will give him that.

Thanks in advance for any input!
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Old 04-08-2009, 11:16 AM
 
Location: Michigan
23 posts, read 177,885 times
Reputation: 23
Default FHA UFMIP Confusion

So, I'm working on calculating my break-even period, but am confused on whether I should be taking into consideration the FHA UFMIP ($2,747) listed on my GFE.

I contacted my broker about the UFMIP asking him how/when we're supposed to pay it, and here's his response (via email):
"The UFPMI is there, but itís not there. It is on your loan but you do not pay for it. It is not included on your payment and you do not pay interest on it. You do not pay for it at closing either."

So, is the UFMIP a neglible item that I do not have to worry about paying? I understand that UFMIP is equal to 1.5% base amount of my mortgage, which equals $2,747, but am just confused as to when or how I pay it (and if I actually need to pay it). From my broker's email, it sounds like I should just ignore it...

I also know that I'll be paying an annual 0.5% of my mortgage amount on a monthly basis (~$66) for PMI. Does this tie into the UFMIP somehow?

I just don't want any surprises with the $2,747 fee when it comes time to close. So, if anyone can provide clarification as to how/when the UFMIP is typically paid off (or if it needs to be paid), that would be great. Thanks!
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Old 04-08-2009, 03:13 PM
 
Location: central, between Pepe's Tacos and Roberto's
2,086 posts, read 6,101,113 times
Reputation: 952
Actually the UFMIP is there and you do pay for it. If you roll it into the loan it is included in your payment and you absolutely do pay interest on it. You don't have to roll it into your loan, you can pay it upfront. If you pay it upfront it must be paid completely though, you can't pay half upfront and finance half of it. It will not affect your loan to value calculations if financed. When calculating your break even period you absolutely should include the UFMIP.

Personal opinion time, I find your broker's response to your question to be very disconcerting as it is simply not accurate. It is an FHA fee and as such we have no control over it, so the need to try and skirt the issue in my opinion is pretty unprofessional.
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Old 04-08-2009, 05:14 PM
 
Location: Michigan
23 posts, read 177,885 times
Reputation: 23
Thanks for the insight. This whole refinancing process has been going on since the end of January, and it is getting pretty tiresome. At this point, we feel like we are committed to staying with our broker since it sounds like we will be closing soon (finally!), but the process has been frustrating to say the least.

I plan on printing off the email from my broker regarding the UFMIP, and then bringing it to closing, so that when I'm looking over the documents and see the UFMIP, I can raise some questions. I just don't see how his response can be interpreted as anything other than we aren't responsible for paying the UFMIP...

One other thing that I had also been leery of is that the broker sent us the Initial Disclosure papers (53 pages) on February 27th and wanted us to sign and date everything as February 3rd (i.e. back-dating). When I questioned it, he stated "By law these dayís we now have to have customers date their documents within 3 dayís of when we first start talking about doing a mortgage for you."

Seems like if that's the law, then they should have followed it in the first place. Oh well... That's the end of my ranting for now.

We are definately looking forward to closing and being done with this. Thanks again for the help.
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Old 04-08-2009, 06:56 PM
 
Location: central, between Pepe's Tacos and Roberto's
2,086 posts, read 6,101,113 times
Reputation: 952
Wow. The more you write about this broker the less I want to hear. Yes, it is required by law that we go over and provide you with a copy of the disclosures in conjuction with the loan application within 3 days of taking the application (I use the date of the credit pull as the application date). The signatures are simply to acknowledge that you have been made aware and provided a copy of said disclosures. If he did not provide the disclosures to you within the 3 day time period, and is asking you to backdate almost a month then he is not in compliance. This is not a new law, it has been in existance since I became an LO in 2006 and well before then. Between that and the UFMIP response either this guy doesn't know how to do his job (possibly an ex-subprime originator jumping on the FHA bandwagon) or he is simply full of you know what. Be very leary of him and please do not hesitate to walk away from the closing table if it doesn't add up. You will have 3 business days to rescind after signing as well. The title company (or attorney I think if you are in an attorney state) will give you a copy of the recission notice. Do not be afraid to use it.
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Old 04-16-2009, 09:41 AM
 
Location: Michigan
23 posts, read 177,885 times
Reputation: 23
Thanks again for the input. I definately will not be afraid to walk away during closing if I start seeing any red flags jumping out at me on the documents.

However, in the meanwhile, should I be concerned with how long the process is taking? I submitted my last piece of paperwork (a W-2 from 2006) on April 3rd, which I had already submitted in February... they must have lost it. It seems like every few weeks or so, he comes back asking for another document, some of which I had already submitted in February. Now, over the past couple of weeks he has been saying that they are working on the condition for "clear to close."

How much longer until it could be considered an unreasonable amount of time to close out this refinancing? It's been over 2 1/2 months since starting the process, and two weeks since I've submitted (or re-submitted) my last piece of paperwork.

I am already starting to consider shopping around for a new broker, but don't want to sell our current broker short, when it seems like we are soooo close to closing.

Thanks!
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Old 04-16-2009, 01:33 PM
 
Location: Sacramento
2,568 posts, read 5,843,251 times
Reputation: 1905
Quote:
Originally Posted by home n00b View Post
Thanks again for the input. I definately will not be afraid to walk away during closing if I start seeing any red flags jumping out at me on the documents.

However, in the meanwhile, should I be concerned with how long the process is taking? I submitted my last piece of paperwork (a W-2 from 2006) on April 3rd, which I had already submitted in February... they must have lost it. It seems like every few weeks or so, he comes back asking for another document, some of which I had already submitted in February. Now, over the past couple of weeks he has been saying that they are working on the condition for "clear to close."

How much longer until it could be considered an unreasonable amount of time to close out this refinancing? It's been over 2 1/2 months since starting the process, and two weeks since I've submitted (or re-submitted) my last piece of paperwork.

I am already starting to consider shopping around for a new broker, but don't want to sell our current broker short, when it seems like we are soooo close to closing.

Thanks!

2 1/2 months? Are you serious? That is a huge red flag.
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Old 04-16-2009, 06:50 PM
 
Location: Michigan
23 posts, read 177,885 times
Reputation: 23
Quote:
Originally Posted by suzie02 View Post
2 1/2 months? Are you serious? That is a huge red flag.
We first inquired in late January, and then handed over all of our documents (W-2's, bank statements, etc) on Feb 2nd. I really hadn't been too concerned with the length of time it's taken to get this thing closed, since I'd heard that mortgage rates should keep getting lower through at least mid-April. But, now mid-April is here, and I'm not sure how much lower rates are going to get, so I just want to get this closed.

I spoke with my broker earlier today to get an update... he's saying that the CTC should be completed by tomorrow or Monday, and then we can close anytime after that. We'll see...
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Old 04-23-2009, 12:32 PM
 
Location: Michigan
23 posts, read 177,885 times
Reputation: 23
Default Am I Being Unrealistic?

So, we finally got the clear to close (closing is set for Monday)! However, I'm a bit disappointed that our interest rate will be 5.00%. Here's my rationale:
  1. When we first got the GFE in early February, a 5% rate was quoted. Since that time, I've been hearing how interest rates are going to keep going lower; thus, I was hoping our rate would get locked in under 5%.
  2. For the past month, as I've been hounding our LO for a closing date and asking to lock-in on a rate, he's been assuring us that "We are watching rates for you and we will get you under 5% for sure, just not sure how far right now." This obviously gave us false hope...
  3. The refinancing process has been lengthy & frustrating, in which I kept giving the LO the benefit of the doubt in hopes that he'd find a way to redeem himself (not that it's necessarily his fault that the rate is at 5%...).
Was I being unrealistic for expecting a rate under 5%? Or should I be thankful for a 5% rate, given the state of the economy (e.g. loans harder to obtain) and our high LTV of 95%?

Should I even bother voicing my disappointment to the LO for constantly telling us it will be under 5%, and not allowing us to lock-in prior to closing? Also, per the GFE there's a 2% YSP... is there even a chance that the rate would be lower if it were a 1% YSP instead?

Thanks for any input!
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Old 04-23-2009, 02:28 PM
 
Location: central, between Pepe's Tacos and Roberto's
2,086 posts, read 6,101,113 times
Reputation: 952
Quote:
Originally Posted by home n00b View Post
So, we finally got the clear to close (closing is set for Monday)! However, I'm a bit disappointed that our interest rate will be 5.00%. Here's my rationale:
  1. When we first got the GFE in early February, a 5% rate was quoted. Since that time, I've been hearing how interest rates are going to keep going lower; thus, I was hoping our rate would get locked in under 5%.
  2. For the past month, as I've been hounding our LO for a closing date and asking to lock-in on a rate, he's been assuring us that "We are watching rates for you and we will get you under 5% for sure, just not sure how far right now." This obviously gave us false hope...
  3. The refinancing process has been lengthy & frustrating, in which I kept giving the LO the benefit of the doubt in hopes that he'd find a way to redeem himself (not that it's necessarily his fault that the rate is at 5%...).
Was I being unrealistic for expecting a rate under 5%? Or should I be thankful for a 5% rate, given the state of the economy (e.g. loans harder to obtain) and our high LTV of 95%?

Should I even bother voicing my disappointment to the LO for constantly telling us it will be under 5%, and not allowing us to lock-in prior to closing? Also, per the GFE there's a 2% YSP... is there even a chance that the rate would be lower if it were a 1% YSP instead?

Thanks for any input!

Yes, rate would be lower at 1% YSP. That being said, many times YSP quoted on the GFE is quoted high to cover the LO's butt. I am not seeing 5% paying 2% YSP today. Perhaps you should have this discussion with your LO?
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