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refi: am I doing it wrong?
Old 12-15-2015, 08:22 AM   #1
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refi: am I doing it wrong?

In 2002 I purchased a house in SoCal. I moved to the east coast in 2009 (military). Because of market conditions I was stuck with my 6.25% loan and could not refinance. I rented the house since then. I now have enough equity to refi. My payment will be $800/mo less than what I have been paying for the past 13 yrs. I am attempting the refi thru the original mortgage company. Let's just say the first name of the company starts with a B and the second name starts with an A. Here are a few of the issues that have come up: They will not accept my income statements for my military pension. They wanted to see my actual bank statements showing the deposits. They said for "income verification" only. I complied. They replied by asking me a bunch of questions about my electric bill, sewage bill, internet bill and church donations since they were all recurring on my bank statements and they assumed these were debts. They are curious and want a letter of explanation for my deposits from my job but will not let me use that income because I just started back to work in Sept after an eight month break. Despite the fact that I have 200K plus in TSP(401K), 45K in ira's and 11K in my checking account, they say I need 17K accessible at this time. Something about 6 months reserve. Ridiculous since I have been paying the new amount plus $800/mo for the past 13 years. Thinking about dumping this attempt and looking for a better offer. Sort of fed up right now. Thoughts? Similar experiences?
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Old 12-15-2015, 08:31 AM   #2
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I refinanced a few years ago and did not run into any such roadblocks.

Your instincts are right. Unless you are near to the finish line and/or have put up a lot of money for refinancing costs I would move on to another lender.

At least tell them that you are tired of their incompetence and they can either approve you based on what they have seen and close on the refi in a week or you'll just move on.

Edited to add: I just noticed that your is a rental and mine was my principal residence, so that might be different.
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Old 12-15-2015, 08:36 AM   #3
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Just a thought but you said you've been renting out the house. If you're trying to refinance as an owner occupant, but infact the house is an investment property, maybe they are seeing some red flags in the bank statements showing your not living in the house.
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Old 12-15-2015, 08:39 AM   #4
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I had a similar situation working through a large national bank that held my original mortgage. Many hoop-jumping issues. I decided they were either 1) not very motivated to reduce my payments (since they were already receiving more money) or 2) too large to just get the job done without having all the red tape and rules. Most likely #2.

I decided to work with a local bank to refinance instead. They were quite motivated to get my business and also understood me and my situation and employer better since they were local to the community. At least that was my take. The only thing I "regret" is that the local bank doesn't have as slick of online capabilities and tools to administer my account. But at least I'm saving over 3% on my overall rate. I can deal with the other stuff.

YMMV
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Old 12-15-2015, 08:41 AM   #5
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So I just helped someone with a loan approval.. someone who had gone through a bankruptcy in 2011 (both business and personal)...who had gaps in his earnings this year...but I specifically went through a CU as I know they are much more lenient to the "owners". They were ok he switched jobs and had a gap, as long as he had 2 years of tax returns that showed he made similar in previous years and he had 2 paycheck stubs at his new job. He had a good credit score and would have to provide bank statements of wherever the money was going to come from for the downpayment.
The credit union I used did not require 6 months of reserves, it was just downpayment, 2 paycheck stubs, bank statements, credit report, 2 yrs tax returns (and in his case proof the bankruptcy was completely written off 4 years prior) so same stuff I remember giving when I got my loan...though I can say I was a little shocked how easy it was.

I'm not surprised they are starting to look at bank statements to figure out if people have additional debt they may be hiding... personal loans, money for kids college, etc You have what shows up on the credit reports, but then you have all kinds of money exchanging hands not reported to credit agencies and I'm sure they are burned a lot on that.
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Old 12-15-2015, 08:46 AM   #6
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You are re-financing a rental property. It is pretty standard. It will be a higher interest rate than an owner occupied.

My last rental re-fi, which i later just paid off, required the following.

740+ credit score
2 month bank statements and 2 years tax forms. Plus a bunch more...
6 months reserve, for all mortgages. Not just the one mortgage. I had much more.
30% equity/LTV (we had 50%)

And I had over $1M in liquid net worth, and it was a $188K mortgage.
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Old 12-15-2015, 08:57 AM   #7
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Might be worth giving Pentagon Federal a shot - or USAA. Probably a bit more military savvy. Rentals do require a bit more hoop jumping - keep calm and keep pushing the forms back at 'em.
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Old 12-15-2015, 09:11 AM   #8
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If the loan is owned by Fannie or Freddie, you may be eligible for a streamlined low/no doc HARP loan. It does not matter if it is an investment property now. The interest rate will be higher than for an owner occupied property, but that's true for a full doc re-finance. It's easiest to do a HARP with the existing servicer, as they get a pass on documentation requirements. If you can't get the current folks at Bank of Ameriwide to do this, find another loan officer who deals with HARP.

If it's not Fannie/Freddie, find a Southern California loan broker that is smart enough to handle this.
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Old 12-15-2015, 09:58 AM   #9
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Originally Posted by Bigdawg View Post
...I am attempting the refi thru the original mortgage company...
We own a primary house and two rentals. No mortgages currently. But in the past, when we refi'd, I never called the current mortgage servicer (usually a large national bank). They were never the one that originated the loan. And they had no incentive to lower my rate.

I'd go to bankrate.com, put in my zip, and contact 7 or 8 lenders at the top of the list. We went with whoever offered the best mix of rate, closing cost, time to close, minimum docs, and convenient closing location. These are brokers who immediately sell the mortgage, often times, back to the same servicer I had before.
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Old 12-15-2015, 10:06 AM   #10
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Bankrate, lending tree, and similar sites are lead aggregators. Your information is sold to a ton of brokers of varying quality that will annoy you day and night. PenFed might work, or try aimloan.com, a direct lender that has very low costs and is internet-only. With the recently tightened conventional mortgage rules, your best bet is still probably HARP, if your loan qualifies.
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Old 12-15-2015, 10:06 AM   #11
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but no matter what you do stay away from Quicken Loans... shysters IME.
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Old 12-15-2015, 10:08 AM   #12
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Quicken Loans is NOT a low cost broker/originator, and I would not use them either.
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Old 12-15-2015, 10:12 AM   #13
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Bankrate, lending tree, and similar sites are lead aggregators. Your information is sold to a ton of brokers of varying quality that will annoy you day and night...
That was never my experience with bankrate.com. You don't even provide any information other than your zip and the type of loan you want. It provides a list of lenders that you deal with directly. Never once had an unsolicited call.
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Old 12-15-2015, 10:33 AM   #14
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That was never my experience with bankrate.com. You don't even provide any information other than your zip and the type of loan you want. It provides a list of lenders that you deal with directly. Never once had an unsolicited call.
+1 I've used bankrate.com several times.

I will say that I have HELOC with the same bank as OP, and they were VERY annoying with the paperwork this time (even though we already have a first mortgage with them). They told me it was because of the new regulations since the financial crisis - that they have to get more information before giving out money.
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Old 12-15-2015, 10:49 AM   #15
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I used Box Home Loans and found them to be cheaper than most... not the cheapest, but cheaper...

They were slow to get things done, but I think it was volume not incompetence.... they also send someone to your house to sign all docs...

Do not know how they are now...


https://www.boxhomeloans.com/
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Old 12-15-2015, 11:09 AM   #16
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Look up your loan to see if it is owned by Fannie/Freddie at these links.

https://www.knowyouroptions.com/loanlookup

https://ww3.freddiemac.com/loanlookup/

In general, the bank that services your loan does not own the loan. Almost all mortgages that fit the conventional guidelines are sold to Fannie or Freddie now. If the servicing entity refinances your loan, they can profit on the refinance fees and they are more likely to retain the servicing once the new loan is sold to Fannie/Freddie. So there is incentive for them to refinance you if possible.

Bank of America servicing is apparently run by the old Countrywide people now. 'Nuff said.
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Old 12-15-2015, 11:41 AM   #17
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Originally Posted by ReadyAimFIRE View Post
I had a similar situation working through a large national bank that held my original mortgage. Many hoop-jumping issues. I decided they were either 1) not very motivated to reduce my payments (since they were already receiving more money) or 2) too large to just get the job done without having all the red tape and rules. Most likely #2.

YMMV
I figured the opposite. Since they already knew my history they would approve it easily. I guessed wrong.
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Old 12-15-2015, 11:44 AM   #18
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You are re-financing a rental property. It is pretty standard. It will be a higher interest rate than an owner occupied.

My last rental re-fi, which i later just paid off, required the following.

740+ credit score
2 month bank statements and 2 years tax forms. Plus a bunch more...
6 months reserve, for all mortgages. Not just the one mortgage. I had much more.
30% equity/LTV (we had 50%)

And I had over $1M in liquid net worth, and it was a $188K mortgage.
It is a rental for now. Me 720, DW 752. Combined income 295K. Maybe it is the two other mortgages totaling 430K along with this one for 370k against a 525K valuation.
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" People say I'm lazy, dreaming my life away Well, they give me all kinds of advice designed to enlighten me When I tell them that I'm doing fine watching shadows on the wall "Don't you miss the big time, boy. You're no longer on the ball" -John Lennon-
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Old 12-15-2015, 11:49 AM   #19
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I used Box Home Loans and found them to be cheaper than most... not the cheapest, but cheaper...

They were slow to get things done, but I think it was volume not incompetence.... they also send someone to your house to sign all docs...

Do not know how they are now...


https://www.boxhomeloans.com/
I have Navy Fed and USAA. I may try them. I have my other 2 mortgages thru Navy Fed so maybe they will want a third. Primary is VA and vacation home is conventional.

Everyone, thanks for the great responses and moral support.
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Old 12-15-2015, 04:35 PM   #20
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Happy with Quicke Loans

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but no matter what you do stay away from Quicken Loans... shysters IME.
I was having similar issues as OP trying to refinance with current mortgage company (a large national firm) except there were no income gaps or investment property factors. After 5 months I threw in the towel and wet with Quicken Loans. They got my refi closed in 45 days. That was 3 years ago and they are still servicing the loan with no issues.
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