Financing in Burbank>Question Details

Didi, Home Buyer in Burbank, CA

Can the lender increase the interest rate or change the closing cost after the customer signed the refinance contract?

Asked by Didi, Burbank, CA Thu Oct 22, 2009

I singed refinance contract and provide the lender cashier check, after three days from signing the contract, the lender informed me that because my property is town house, the mortgage will be increase because I have to pay 1 point extra from my loan or the interest rate will increase.

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9
Alex Gomez’s answer
Hi Didi, although most townhomes have a similar legal structure to condos they are not treated as such when being priced and most lenders do not charge additional fees for townhomes (often PUDS) Condos are a completely different beast.

You must first find out if your lender/broker locked-in your loan rate and for how long was the lock in (10,15,30 days)

When you say contract I assume that you mean that you signed the closing documents, so if that is the case most likely then the rate was already locked in because it is required that the rate be locked prior to closing and in that case there could be no further changes to your loan unless your lock-in rate expired during the 3 day recission period and then that would give the lender/broker and opportunity to change the rate and or costs to cover any possible losses to his yield spread (YSP) from any changes in your old rate. It's a little complicate however any responsible (professional lender/broker) should have made you aware of these possible changes. Any changes which adversely affect your rate or costs most be re-disclosed prior to closing and failure to do so could be costly to them.
Web Reference: http://www.onebankloan.com
0 votes Thank Flag Link Fri Oct 23, 2009
Hi Didi,

There is every possibility that the lenders/loan officer gave you single family rates instead of rates for townhomes/Condo. Per chance did you tell the lenders you live in a Single Family?

The Lenders should have spotted the error in the Title Report itself or latest in the Appraisal Report.

Speak to the Lenders and try to sort out the issue. Worst come worst you always have the option to get a new refinance application rolling.

Jacob
Web Reference: http://bestcaloans.com
0 votes Thank Flag Link Thu Oct 22, 2009
The lender is required to redisclose a new good faith estimate and truth in lending form any time the APR ( annual percentage rate) changes by .125%, increase or decrease. AND, loan documents cannot be signed until the (3rd) business day after. In addition, after signing the final loan papers, the client then has (3) business days before funding/then recording. If the lender made a mistabke on the charges due to the property, this should have been caught when the appraisal came in. Lender should be held accountable and not charge client the fee.
0 votes Thank Flag Link Thu Oct 22, 2009
I believe they need to redisclose the file if the apr changes by .125%. Also, a townhome can be either a condominium or a pud. Depends on how ownership is taken on the property. Puds (planned unit development) typically has the same pricing etc as a single family residence. Condos are a different story. Technically, "townhome" is not a legal description of a property, it is just a fancy word that was given to rowhomes to sound nicer. And it does sound nicer!
0 votes Thank Flag Link Thu Oct 22, 2009
A townhouse is legally considered a condo and there's usually an additional charge for a condo. The new law states that if the original good faith estimate varies from the final by a small percentage (I forget what that percentage is) they have to provide you w/ a new one. It sounds like you had a very inexperienced loan officer. Check to see if they even have a license and make the broker eat it. If they don't eat it then walk away and find another lender. Call me if you need a good referral (818) 416-7511.
0 votes Thank Flag Link Thu Oct 22, 2009
Sounds fishy, go with a trusted bank like Bank of America. I would be happy to assist you.
0 votes Thank Flag Link Thu Oct 22, 2009
Cross qualify yourself for your refinance with a major bank, like BofA or Wells Fargo or Chase. Don't tell them your current situation as you want them to be honest about what they can offer without them knowing that they're competing over another mortgage broker.

If you have all of your financial information together, like I'm sure you have, the larger bank can qualify you in 24-48hrs. Start this today & by Monday you'll know if Loan officer #1 is trying to pull the wool over your eyes.

I'm glad you came onto Trulia today to ask an expert & I hope between my answers and the others we'll have saved you money & headache!

emilyknell1@yahoo.com
0 votes Thank Flag Link Thu Oct 22, 2009
Hogwash. Most likely the loan officer quoted you a rate they can't offer anymore and is looking for a way out. If it were a condo, maybe, but a town house is the same as a single family home. Also, the loan officer must redisclose to you the changes to the loan on paper (so make sure they do that). Speak to a Manager about the situation. If they can't keep the rate the same, go somewhere else. Tell them to show you proof that the lender requires a bump to pricing...and if it's a broker, tell them to find a different lender to use.
0 votes Thank Flag Link Thu Oct 22, 2009
I assume it is because the property type was actually a condo (townhouse is not a legal description), and there was a risk based add-on, probably for it being a condo with an ltv more than 75%. They should have caught that from the appraisal and adjusted the price accordingly before having docs sent out to you for signature. I would complain to the loan officer to see if they can waive the extra point.
0 votes Thank Flag Link Thu Oct 22, 2009
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