Loan Amount: $374,250.00
Loan Term: 30 years
Interest Rate: 3.750%
Payment (Principal, Interest, any mortgage insurance): $1733.22/month
Adjusted Origination Charges: $0
Charges for All Other Settlement Serveces: $9018.62
Origination charge: $0
Your credit or charge (points) for the specific interest rate chosen (3.75%): $0
Required services that we select:
Appraisal Fee: $0
VA Funding Fee: $1862.50
Credit Report Fee: $0
Title services and lender's title insurance: $1900
Owner's title insurance: n/a
Required services that you can shop for:
Tax Service Fee: $70
Flood (Life of Loan): $19
Government recording charges: $158.00
Transfer taxes: $1246.00
Initial deposit for escrow account (all property taxes, all insurance): $2166.76
Daily interest charges: $38.45 per day for 12 days: $461.40
Homeowner's insurance: $1134.96
Total estimated settlement charges: $9018.62
That rate should be paying you a BIG credit - so since you arent getting it the person doing the loan is
I would shop around - you may save $3000-$4000 (Or more)
The interest rate?
He did mention a credit on the phone, "to cover closing costs"...
Can you elaborate so I know exactly what to say when I question the 'rate and credit'?
I'm very green at all of this, I apologize.
If there was a credit it should have been reflected in the GFE - I would ask about that
Rates are hard to understand but I will try to explain
A Par rate means you dont have to pay nor do you get a credit
A rate less than par (lower rate) will be a cost to you so you are "buying down" the rate
A rate above par gives a credit which you can use towards your closing costs
Now here is where it gets complicated
When loans are sold certain benchmarks carry a premium on the secondary market
right now 3.75% is paying a lot because (my professional guess) the investors that buy these loans are willing to pay more for it -
On my rate sheet I am not seeing a par rate
3.75% is paying almost 1 1/2 percent of the loan amount as a credit
3.5% would be at a cost to you
In this case the 3.75% is paying so much that paying anything to get 1/4% better makes little sense
Hope this helps
Thanks!! He DID mention that paying for a lower rate made zero sense. I'll look closer at the GFE this evening.
During the phone call, I was under the impression that closing costs were est to be around $3000, and covered, but if it's not reflected on the GFE I'll definitely ask for clarification.
Lastly, this is strictly an IRRL with VA. If I were to go outside of current lien holder, would further documentation be required? The thought of providing bank statements, pay stubs, first born child, credit check, etc as we did when we originally got the home is daunting. We used Craig from this board as our lender, and he was amazing. I wish he was still around.
VA IRRL would be the same with any lender and does not have to be with your original lender - the same documentation would be needed with all - you will likely have a credit pull - need to prove employment and maybe a little more if the lender has overlays - it is supposed to be easy and based on your past credit performance with regards to the mortgage.
to help me further understand...the 1.5 percent credit you speak of above, is that an amount that is must given back to a broker to refund to a customer (or is it discretion) and is that something a broker can adjust to increase or decrease their income?
also does the comment that 3.75 is paying so much mean that it doesnt pay to get the 3.5 without the credit and you should definitely get the 3.75? i dont understand where the 1/4 percent comment comes in
I sent this email over this morning:
"I've shopped our file, and I've been told the rate given would give us a fairly large credit, and it's not listed on the GFE. Typically a credit of anywhere from 1% to 1.5%. Where is this credit going, and why isn't it on the GFE?"
LO just sent this response:
"The package you got from corp should have your GFE and TIL. I do not have access to these until,, after corp sends them out to the borrower. That is why I try to get the app out as soon as possible. Once a GFE is transmitted I no longer have control. This is suppose to protect the borrower from the loan officer changing anything. Under the old system I could get the GFE. Iíve complained about this because I like to get the GFE and TIL out to the client as soon as I take the app.
Hope that answers your question."
So...he totally skipped answering my direct question, right? How do I respond? Shall I just tell him, "Thanks, but no thanks" and move on?
In my opinion, the GFE form does not give an accurate reflection of the cost to do a loan, particularly a refinance. I suggest that borrowers look at a few items to determine this: the rate, the new loan amount, and the current loan amount. The difference between the new loan amount and the old is the true cost of doing the loan. The GFE reflects fees that are paid to the broker from the lender, and can be confusing as to the cost of the refi.
There also can be a difference in these amounts when a GFE is issued from a bank and a broker, as different rules apply to both.
Hope this helps,
Thanks for serving
He did skirt the subject - did you get an itemization? That would have a better break down of all costs involved and should reflect any credits -
I wouldnt move on but you may want to get another offer before investing too much time or money
LD to answer your question - the credit would be going somewhere - bankers that have one source for their funding have to set the amount they can charge and that cannot vary - brokers do as well - however they can set it different with different lenders so they can change the amount they make simply by sending to a different lender (This is my understanding at least someone will correct me if I am wrong) the rate at 3.75% should cove any banker or broker commission and still pay out to the borrower
and yes I am saying there is too big a spread between 3.5% and 3.75% to justify the cost of the lower rate
Thank you again, Brian.
I'm not seeing an itemization, unless I'm completely missing it. I do have a Sunmary of GFE Estimate Paid by Totals, and a separate sheet Loan Profile Information. If I specifically request an itemization, shall I just call it that--an itemization?
You can call it an itemization or a fees breakdown. You just want to see an itemized list of all the fess that go into the loan.
Just received a call from him. On the application, under 'Details of Transaction'--line L, 'Other Credits'--Lender paid $3141.50.
He's stating this is the lender credit..
Is this correct? Should I be uncomfortable it's not reflected on the GFE?