I just read the nightmare thread of Nords regarding his Penfed refinance, and was considering this as one of the options (although I don't live in Hawaii):
One of the reasons we had such a bad experience with PenFed is because we live in Hawaii. Hopefully their "nationally certified" subcontractors are actually certified in whatever nation they think you live in.
I just had another bad customer-service experience with their CD guys. It's a niche issue (I was trying to open a CD account for my father with me as conservator) but it was so bad that I'm wondering who hires these people. Two isolated incidents, true, but in two widely different parts of the company over a year apart. I'll write it up as a separate post.
How do I go about finding the best deal? I looked up Penfed's rates for conforming 30-year loans:
Rate Points APR
3.625 1.375 3.866
There's a lot of fine print to be read. For example, this rate wasn't even advertised on PenFed's website when we refi'd. Only at the last step ("Choose the type of loan you want") did it show the 3.625% rate & points. Today I'm still wondering if they screwed up their website listings. So it's hypothetically possible that you'll find an even better deal awaiting at the end of PenFed's online application process. When you finish the online application, make sure you have a printout. You may have to provide that to PenFed later if they make a mistake.
You may also have "loan origination fees" of about 1%. So our PenFed refi actually charged 2.375 points, and they later gave back part of that for some reason (online application? auto-deduction of the payment? I forget) to make the actual fees & points 2.125%.
One way to look at the points would be to decide how much more you'd pay over the life of the loan. You pay up front for the 3.625% rate, but you save a lot of interest over the next 30 years. How long does it take to recoup the 1.375 (or 2.375) points at the lower payments? Paying points was a risky business back when rates were 7% and dropping, but today (when rates can't possibly go any lower and this time I really mean it) a few points has a big impact on a 30-year rate.
While the points are higher for my local credit union, I'm not sure what Penfed's closing costs would be.
They're actually pretty good. Most of PenFed's profit comes from that (non-negotiable) 1% loan origination fee. You pay for title insurance, and you could ask the title company to have the insurer re-issue the existing policy at a discount. If you've done business with the title company before then you could ask them for a discount. You may have to pay an appraisal, but if the tax assessment is relatively recent (or if the loan is a smaller percentage of the home's value) you may be able to get that done online or waived. You'll pay some faxing and FedEx and recording fees but they're usually reasonable also. You might get free pens at closing!
The issue with PenFed's closing fees is that they may actually be so low that you get what you pay for. We certainly did.
My questions are:
1. Should I just submit applications to all of these places (and join Penfed and this local credit union of my employer) to find out what the exact numbers are? It seems like a lot of work unless I can submit the same information to all 4 without filling out formal applications.
I agree that it sounds like a lot of work for "good faith estimates". We usually just estimated $2000 in closing costs above & beyond the points & origination fees.
2. Do I tell each one that I am shopping around or does it not matter?
They don't care either way. They won't give you a better deal and they won't turn you down.
3. Can I buy 1 Fico credit report and send copies to multiple companies so that I would have it for myself as well as avoid a credit pull?
Nope, they have to show auditors (or prosecutors) that they actually pulled your credit report instead of being misled by a faked one.
Any advice appreciated, this will be my first time refinancing.
1. Deposit the closing funds into escrow at least a week before closing, and put an extra $1000 in there in case the loan doesn't close until a day or two later than projected. Confirm with the title company that they have more money than they need. This way you won't have to scramble to come up with a certified check (or cash) at closing.
2. At closing you may be able to sign up to have your monthly mortgage payment deducted from your checking or savings account. Have your checking-account number and routing transaction number handy.
3. We preferred to close in the morning, ideally the second closing of the day when they're still fresh but everyone's had their first cup of coffee. This gives them the rest of the business day to fix problems. It also gives you the rest of the day to scramble for checks or any other paperwork you may need to resolve. Whatever else you do, try mightily to avoid closing on a Friday. That's just too much pressure. Wednesday is good. Tuesday is even better. Monday's OK if everyone shows up sober from their weekend.
4. This is a huge point: politely and patiently explain to the title company that you're going to read every piece of paper in the 100-page closing document. Tell them it'll take you about two hours, and that you want to be left alone to read and to write down your questions and to check math with a calculator. Tell them that if they sit there, tapping their pens on the table and sighing and rolling their eyes, that it'll take you four hours. In exchange for minimizing this use of their time, ask them to give you the preliminary package 24-48 hours before closing for you to read. They have to have it ready by then anyway, so you're just asking them to share an extra copy with you. Tell them that you'd even take it by e-mail (that's how PenFed exchanges the paperwork with the title company).
Then sit down and actually read the whole thing, making sure that you understand it all. Make notes on your copy. Keep a calculator handy. Google phrases or terms that you don't understand. Write down your questions and get clear explanations from them the very next day. If you're feeling rushed or pressured, just sigh and shake your head and get up to leave, telling them you're sorry to delay the closing but you'll return after you've had a chance to go over the papers with your lawyer. Be polite & patient, but stick to your guns.
If you read the closing papers a day or two before, and have them answer your questions before the actual closing, then at the closing itself you can just check that the stack you're signing is a match for the stack you read earlier.
We saw errors all the time: typos of our names and addresses. Transposed digits. Duplicate fees. The wrong interest rates. The wrong number of points. The wrong dates. The wrong numbers in the wrong boxes. The wrong calculation of accumulated interest before the first payment. Incorrectly establishing holding accounts for taxes & insurance when we'd asked for that to be waived. And so on.
Nobody is trying to be evil. They're just backlogged, rushed, and tired. They'd have to fix all these mistakes anyway when they're caught at recording or at annual review, so they might as well fix them before the closing.
If this is your first refi, consider finding someone in your local area who's familiar with your title company and who can help you go over the paperwork. You don't necessarily need (or want) a lawyer as much as you want a friend, an accountant, a realtor, a mortgage broker, or just someone who's done a few of these. We can write thousands of words of advice on this board but we don't know local custom for your area, and we don't know anything about the title company you're using... and neither does PenFed!
When we refinanced our WA home they were in a little office in Eugene, OR. 
