I currently have an FHA mortgage on my home at 4.5% that I purchased in 2010. Of course FHA mortgages at that time come with mortgage insurance that must be paid until LTV reaches 78% (I think) of the purchased value. This takes about 11 years. I’m looking to refinance because rates are under 4% and my home has increased in value quite a bit.
My current lender offered to refinance into a traditional fixed 30 yr. mortgage at 3.75% assuming my LTV was 80%. I paid for an appraisal and, unfortunately, it came in lower than everyone thought…I’m at about 82% LTV. I will have to have PMI for about a year as a result. So, after underwriting took this into account my interest rate was raised to 3.875 with a -0.25% credit toward closing. Even with PMI this seems like a good deal as I will be saving a considerable sum monthly and over the life of the loan.
The above counteroffer was made in October and I decided to move forward with the process. Since then I have asked on numerous occasions for a new loan estimate or GFE that breaks down the closing costs, etc. The loan officer kept telling me he was having trouble generating one. This was aggravating but I didn’t think too much about it. I finally received a new GFE yesterday which is over two months after the counteroffer was made. The GFE lists the correct interest rate (3.875%) but, instead of a -0.25% credit, they were charging me 0.5% for the loan. I emailed my loan officer and he stated that this was a mistake and that I now have a -0.125% credit toward closing.
Now I’m angry and I’m not sure if I should be. I was offered a loan at 3.875% with a credit of -0.25%. The GFE shows that I must pay 0.5% and my loan officer tells me that I now have a credit of only -0.125%. This seems very sloppy to me at the very least. I started this process in September so I’m also not happy that it is taking almost 4 months to complete a refinance. I feel like they are dragging their feet and have lowered my credit toward closing just because they can. Sure, I can still walk away but then I have to start the process over and I’m out the $500 for the appraisal.
I’m wondering what could have caused the closing credit to be reduced. Is this at the discretion of the loan officer? He claims he has no idea why the credit was reduced and will look into it. I should also mention that I locked my rate in September and the bank extended the lock because of the time it has taken to get this refinance done.
Is it commonplace for credits toward closing to be reduced like this or am I being screwed over?