Wow, thank goodness I locked. .5% is huge!
Based on your loan size it would have cost you ~$3,500 had you failed to lock in before yesterday.
Seems like it translates into the equivalent of about .125% on the rate. But the market has been rocked by the sudden announcement, and 15 year fixed rates are currently about .25% higher than they were two days ago. Rates are also higher for new purchases, even though they were technically supposed to be unaffected. It’s possible that things will settle down as the market digests the situation.
I have some sympathy for the lenders here, who were caught off-guard. If they had more notice they could have priced it in where appropriate and not priced it in where not appropriate. But 18 days is not really enough time to process a mortgage from rate lock to finish, so they are exposed on a lot of mortgages where they’ve locked in the terms and now hit with an extra fee they can’t pass on. Like mine, which is not expected to close until September sometime.
One thing that makes me a bit nervous is if the lender decides hey we’re not making any money on this anyway, and then takes a hard line on all sorts of picayune things and finds a way to weasel out of the deal. I don’t expect it, but you never know, and it’s a lot of money on the line.
Actually I spoke with my broker today, and because my loan is a jumbo it wouldn’t get hit with the surcharge, unlike smaller loans. That having been said, if the whole market is up .25%, then yeah, that’d apply to me if I hadn’t locked.
On a semi-related note, one oddity of mortgage payments is that many banks seem to treat all extra principal payments as if they were paid at the beginning of the month, even if they were actually paid on the last day. I’ve noticed this (with WF) when I’ve made extra principal payments myself, and on looking around I see that it’s discussed as a common practice. Which is a tremendous oddity, in that the lenders are giving something for free for no apparent reason (most people probably don’t even realize they’re doing it), but that seems to be how many lenders do it.
As a practical matter, this means that if you’re earning something on the money that you intend to use to pay the extra principal, that you should pay it at the end of the month, and not at the beginning. More significantly, if you’re paying something for the money that you’re using to pay the extra principal, that you should also pay it as late in the month as possible. This can come up in a refi situation.
It would not apply to the property being refinanced, since that’s a payoff situation, and lenders calculate that interest to the day. But let’s suppose you’re doing (as I am) a cash-out refinance, with the intention of using the cash-out portion to pay off much of a higher-rate loan you have elsewhere. It would be in your interest to close on a day such that the funding will take place on the last day of the month, if possible.
As an example, imagine you have mortgages on two properties. One property is worth $600K, and your balance is $250K. The other property has a balance of $200K, for a total debt of $450K. Your idea is to refi the first property with a new loan amount of $420K, i.e. $170K cash-out, which you will use to reduce the principal on the second loan to $30K. Now if you fund on the first day of the month, then you’re paying interest on the entire $450K for the entire month, based on $420K for the new loan and $30K for the loan on the second property.
But imagine the refi funds on the last day of the month. The title closer for the refi calculates interest on the $250K loan for an entire month, and the refi $420K for a day. But the second lender treats the $170K as if you’ve paid it on the first of the month, so that you’re charged interest on $30K for the month. Effectively, you’ve saved yourself a month of interest on $170K, which even at today’s rates is about $500.
Unfortunately, one casualty of today’s frenzied refi market is that it’s not always possible to time these things. I myself just got final approval for my refi (along the lines above) last Friday, but the lender says they’re backed up and can’t close until September. 
(I’m afraid to push it to the end of September.)
Just closed today, or at least the notary stopped by for a masked signing session. I get $437 back from the closing (if the check ever shows up from our screwed-up USPS), but honestly I can’t say if I got screwed per above post because of what date I closed*. And naturally I don’t pay my mortgage in September, first payment Oct 1, which confuses things even more.
*Please insert the smiley with the question marks above where the asterisk is. We don’t get that emoji any more.
.???
I don’t think you could have gotten screwed. The question was whether you got a windfall. And I assume you didn’t. As previous, what I’ve described applies to payments of extra principal to a loan which is not being paid off. When you pay off a loan, the interest is calculated to the day.
What’s happening in September is that you’re getting an “interest only” loan for the month of closing (August, in your case), and that interest is paid as part of the closing, so you don’t make any (separate) payments for that month. The payoff calculation for the old mortgage loan includes interest to the day of funding (presumably August 21, if it’s the same as NJ), and the “prepaid interest” item is covering your interest until the first of the next month (September). So the first regular monthly interest-plus-principal payment applies to the next month (September) and is due on the first of the following month (i.e. October 1).
[Note, it’s possible that you’ll get back more than $437. It’s common for the closing calculations to include some extra interest in case things get delayed for whatever reason, and if things don’t get delayed, then you’ll get that money back.]
I asked the broker we got our original mortgage from and also put details in at RocketMortgage. Looks like it doesn’t really quite make sense for us to refi right now.
The RocketMortgage experience was awful. The webpage, after I had put in all my info, showed me a “summary” page with just blatantly incorrect info (they increased what our current payment was by like $400 and then showed how we were saving an amazing $420 a month!) I went back and verified that I hadn’t somehow typoed my input, but no, they’re just straight up lying on the summary page.
A day or two later I got an email from a salesperson with this text:
Yeah, I bet no reputable lender will match it. Totally scammy vibe.
Or they figured out their web site gave you bad info, and reached out to correct it?
That’s not what they said, though. It’s not that they gave me the wrong price for their offering. They gave me the wrong price for my current one.