All Forum Posts by: Merritt Noel

Working in the industry the Closing Disclosure can be a little misleading.  However, to have your inital cash to close jump from $871 to $5,808 without any real explanation or discussion to explain the reasoning would be very frustrating.

To answer your questions:

1. obviously the difference between $7,771 and $10,309.99 does not add up to $5,100. its actually $2,538.99

1.1   Link F will only show property taxes that are due in the coming month or two. And therefore are broken out from section G which shows what needs to be collected to fund new escrow account.  You can easily look up what the property taxes are online and if there are outstanding taxes due. And when your next installment will be due...this should help shed some light on the discrepancies you are seeing on the CD.  

2. As for total closing costs upwards of $10,000 that is a difficult question to answer as everyone's situation is different.  Any time closing costs change by that sizable amount someone (most likely) the LO did not do their due diligence.  And it sounds like they are also afraid help you understand what exactly is going on.  I do not remember the last time my closing costs for a client ever were more than $1000 higher than what I initially disclosed. But I am also very detailed oriented and make sure everything is dialed in from the get to.  

Personally, I would ask for a detailed walk through of why the costs changed. Specifically, why they are collecting over $6,400 in property taxes alone. That is a sizable amount of money and increase to new loan size.  If there are past due taxes that need to be rectified that would make sense.  But you still also have the different amounts listed for property taxes which need explanation and to be double checked by the closer who worked those figures.  

I hope this provides you a couple talking points as you have ever right to fully understand why the drastic change in cash to close in addition to why they are collecting 18 months of taxes with varying tax figures.  Good Luck and look up your property taxes online so you have that information ready when speaking to them.  

I am not familiar with LimaOne.  As I suggest to anyone buying or refinancing even my clients.  Always get at least two quotes ideally three.  Be careful about singing any contractual contracts with anyone that may be legally binding for a period of time without truly understanding what you the contract.  Lastly, never pay any money up front when looking for financing options. That is a big red flag and a way shady lenders back you into a corner if things change from what was originally disclosed you are out said money.  Good Luck!

@Tim Emery Thanks for the post.  I have been meaning to go for sometime and finally pulled the trigger.  See you there!

@Billy Smith The costs you are referencing stated by Bankrate.com are misleading to say the least.  If you add up the costs show in the itemized breakdown of the "Itemized origination fees charged by the lender" and "Itemized third-party fees" it does not add up to roughly $2,000.  

Itemized origination fees charged by the lender = $ 2,907 

Itemized third-party fees = $1,464. 

Total fees = $4,371.00 

The total = $1,957.00 is the total of  Origination Fees Charged by Lender = $903 (which doesn't add up to me) plus Third Party Fees = $1,055 (again doesn't add to me)  ***I can't make sense of these two figures based on the itemized figures they have posted. ***

@Thomas N. I am making an assumption that you are purchasing the home?  If that is the case my guess is the majority of your fees are related to the property taxes and homeowners insurance.  With reference to the property taxes; since property taxes are paid in arrears you will get a pro-prated amount back from the current owners for the length of time that they lived in the home this year.  Regarding the homeowners insurance, a lender is going to require you to pay the homeowners insurance  upfront and it is what is it.  

To answer your question about negotiating fees, I would look at the specific lenders fees (i.e. origination charges, underwriting fees, etc) and compare it to an other lender.  This is give you a starting point for negotiation.  That being said everyone on the loan has to get paid one way or another.  And if you have a quality lender there is some peace of mind to think about in the process.   Good Luck!   

@Cesar Rivera you should have no issue getting a HELOC give the equity plus your income. You will need to look at regional banks or local credit unions for that product rather than a big bank. One thing to ask about when doing your research is if they offer the ability to lock in the rate at a later time in the HELOC. This is offers some security given we are in an interest rate raising environment. Good Luck in your search!

One thing to keep in mind is the potential for the mortgage interest rate write-off.  This is something that a CPL could better inform you on.  But if its a scenario that you might hit a lower tax bracket with the mortgage interest write off that could help?  Plus to access $27,000 today at low interest rate.  You could earn more year over year with that money in some sort of investment vehicle rather than having it tied up in the property.  Just my two cents.  Good Luck!

@Grant Shipman I congratulate you your idea to house hack with a great plan in my opinion!  Being a lender as long as you are occupying the property you can do whatever you want with the other rooms.  All that I care about is someone on the loan occupies the property and you make the mortgage payments.  People get in trouble when they lie about it being a primary residence and never occupy the property.  Mail never goes to property and red flags go up.  There are tricky ways that lenders these days verify a borrower is actually living in the property without your knowledge.  

Feel free to contact me with any additional questions.  And good luck with your plan...sounds solid to me!  Take Care

@Victor Kozlovsky refinancing from a primary residence to an investment property will result in a higher interest rate than if it was classified as a primary. Any bank is going to look at the current status of the property not the fact that you lived in it for 3 yrs prior. There are different guidelines that result in more pricing adjustments for investment properties than primary...strictly due to the risks associated with rental properties. Their is some information that would be helpful to know. 1. What is your current loan type (i.e. Conv., FHA, VA) 2. What is your goal in refinancing?

@Jordan Coates - I am a lender here in Colorado and I have personally used HELOCs to fund purchases and other investments. The first thing to think about is the fact that a HELOC is going to be driven by the Prime Rate. Therefore with an interest rate raising environment which we are in, your payment over time will be higher.  That being said for the amount of money that you are looking to borrower vs. your net rental income, you potentially could pay off that HELOC within a 4-5 years if you are diligent about paying down the principal.  Some HELOCs allow you to fix a portion of the HELOC protecting yourself some higher rates.  To explain further, say you borrower $16,000 of the $60,000 HELOC you have.  You could be able to get a fixed rate while potentially still having access to the remaining amount of the HELOC.  Definitely something you will want to look into and shop around to see if any banks in your area offer. 

Another option to think about if you are concerned about raising interest rates is to just do a refi-cashout on your primary residence to access the equity you may need.  Hope this helps!