The media has been buzzing with talk of “re-setting” adjustable rate mortgages of late. For the vast majority of home owners that took out adjustable rate mortgage anytime between 1997 and 2005 it has turned out to be a very wise decision as they have enjoyed the benefit of substantial interest savings. As a result of the fact that there are several Trillion dollars worth of adjustable rate mortgages that are reaching the end of their fixed rate period over the next 12 to 24 months many homeowners are looking to refinance. In the past week I have spoken with 3 homeowners that were proactively contacted by either lenders or mortgage brokers soliciting their refinance business. All three of these homeowners were being mis-quoted the cost associated with refinance by the lender or broker that contacted them. The misleading practice of under-quoting closing costs in an effort to win a homeowners business has existed in the mortgage business for years but has become more frequent as a result of increased competition in the current mortgage environment. The three top items you should watch out for that are frequently under-quoted on good faith estimates for refinances are:
1. Title Insurance Charges
2. Escrow amounts (amounts needed to set up escrow accounts for your property taxes and insurance)
3. Appraisal fees (many times are not even included in the quote)
So how do you avoid being under-quoted and getting a very unpleasant surprise at the closing table? First get a referral from a friend, family member or professional Realtor to a reputable lender. Second, chose your closing agent and ask them to prepare a preliminary settlement statement that will show you what the title charges will actually be. Third ask your lender if a full appraisal will be needed and what the charge for the appraisal will be. Full appraisals on a single family homes start at about $325 and go up depending on the complexity of the assignment. The last and perhaps most effective thing you can do to ensure that you are getting an accurate quote on your refinance is to fax a copy of the good faith estimate you received to my office at 305-960-5237. Make sure you include a return phone number or email so I can give you some feedback. I have and will continue to provided this free service as a means of giving back to the business that has been so good to me. I will not solicit your business but I will give you clear concise answers to your questions.