Adventures in Refinancing

During the few months my house has been waiting for permits (which I should finally get this coming week! woohoo!), I’ve been exploring different refinancing options to take advantage of how low 30-year fixed mortgage rates are right now. The process has been anything but straightforward and it’s starting to get a bit infuriating.

I am currently holding a 5/1 ARM at 5.75% and a home equity line of credit indexed to prime-minus-0.25% with a floor of 4.22%. Since prime is currently 3.25%, the line is currently floored. The ARM is for the maximum amount allowed short of a jumbo.

The process began for me back in mid-February when I happened to notice Countrywide advertising 30-year fixed jumbos at 6%. I hadn’t seen jumbos below 7% since the sub-prime crisis began, so I got the ball rolling. Everything seemed great for the first few weeks and my appraisal came in at exactly what I paid for the house, so I thought I was home free. Then the trouble began. Countrywide underwriting began asking for all sorts of additional documents, which I ended up providing eventually because they said that was all they needed to close. Then, a whole two months into the process, they wanted me to go to my HR department and provide written compensation guarantees using language my HR department was not comfortable with (and neither was I, to be frank).

All this for someone who has perfect credit, a comfortable salary, plenty of equity in his property, and the ability to pay off the entire house tomorrow if necessary. At this point, I felt something strange was afoot at Countrywide underwriting, so I called up my current lender, Wells Fargo, to see what their best deal was.

My previous agent at Wells told me they didn’t have any great jumbos available, but that they could refinance my first mortgage into a 30-year fixed at 4.875% and keep my HELOC as is. Not bad at all. I spent the evening creating a spreadsheet comparing cash flows between the split option and the jumbo option and sent it to my Wells agent in advance of our meeting the next day.

To my surprise, my agent tried to forward my email and spreadsheet to a friend in his office with a snarky note attached to it. To his surprise, he accidentally hit “reply” instead of “forward” and it came to me. I called him immediately to cancel our meeting and our financial relationship.

Always remember the golden rule of e-mail: If you aren’t comfortable with the entire world seeing an e-mail you’re writing, then don’t write it. Or at least don’t be a jackass and send it directly to the person you’d least like to see it.

Anyway, I had nothing against Wells Fargo as an institution, so I called another agent in Seattle and got the ball rolling on the split option refi. Everything was hunky dory until the appraisal came through underneath what I paid for the house. I would understand this if I bought at the peak or if I didn’t get the place off-market for under even the tax assessed value, but something didn’t smell right. I looked at the appraisal and the person got some material things wrong, including square footage and using comps that weren’t even in my neighborhood!

So now it appears I have to dispute the appraisal.

Here’s what makes no sense at all to me though: Since the jumbo limit in my area has gone down about $60k, I am willingly paying $60k to decrease the size of this loan down to the new limit. Therefore, I am owing my bank less money. Therefore, even if the property was appraised at one dollar, the bank would be better off carrying my new loan than my old one, from a risk standpoint! There shouldn’t even be a loan approval process at all in this case!

What makes me even more mad is that I met one of my neighbors yesterday who was in the same situation with ING, and he said he spent literally 5 minutes on the phone with ING and did a “mortgage modification” into a 30-year fixed with no paperwork, no escrow, no appraisal, etc. Why I can’t do something like this with Wells, I have no idea.

Permits are coming this week, so having this issue outstanding for three months now is starting to really make me nervous.

6 Responses to “Adventures in Refinancing”

  1. Matt Says:

    This sounds really familiar. I recently did a refi myself and was run through the wringer by the bank which wanted compensation letters from my HR department as well, including written confirmation of a corporate acquisition which had affected my job over the previous X years (apparently press releases weren’t sufficient “proof,” which really irritated me). My house easily appraised at nearly twice what I was borrowing, and my borrowed amount was not much more than a year’s salary. I got really testy with with the loan people, but there wasn’t much I could do. It ultimately worked out, but I can’t imagine how ordinary home buyers can possibly get a loan these days. It was such a rotten ordeal for me, I’ll try to never do that again.

  2. Daryn Says:

    Hey Mike,

    I recently worked with a guy named Brian Thielicke over at Cobalt Mortgage, and he was great. Obviously more paperwork is required these days than a year or two ago, but Brian was great to work with, honest, and presented us with all the information and options we needed to make the best decision about out re-fi.

    Brian’s #: 206.631.2215

  3. Cara Says:

    Doh! What a doof. Now I really want to know what his snarky comments were though. I sent my loan officer a spreadsheet one time too when I was trying to wrap my head around some of the loan options he was giving me. He completely ignored my email. Now I wonder if he forwarded it to some of his buddies and laughed me!

  4. Shannon Says:

    We’re doing a re-fi now, not sure how its going to work out but we have a good relationship with a mortgage officer, Katherine Keller, at Guarantee Mortgage downtown. She has done our original mortgage and one refi and has done 2 for friends. Everyone has been happy (even one done recently). She shops around for a good rate – you tell her what you want – and handles all the interface and paperwork. She is also quite frank and could tell you what is going on with these banks in particular.


  5. I am surprised you are having a hard time with Wells (beyond the snarky guy). From everyone I have talked to – and within my own experience for my mortgage – Wells has had fantastic customer service.

    Although admittedly, my 160k mortgage on a 30-year fixed is a lot simpler of a situation than what I am sure you are experiencing ;)

  6. Mike D. Says:

    Thanks for the recommendations, everyone. Looks like I might actually sign this week and close next week. Starting to get really frustrating. Oh well, at least I locked before rates went up.