What You Can Learn From My Mortgage Refinance Debacle


I was ready to refinance my mortgage. With rates rising, I didn’t want to miss my chance to consolidate a HELOC I had used for renovations at a lower interest rate, in addition to my main mortgage.

It was a great plan to lower my interest charges and monthly expenses, until a misunderstanding with my loan originator meant I missed my window after all. Even for someone writing about mortgages for a living, it can be easy to overlook some fine print and cost you money.

I decided against going through my refi once I crunched the new numbers, but here’s what I learned from the experience. I hope you see this as a cautionary tale so you don’t make the same mistake.

What happened to my mortgage refinance?

My mishap was with the rate lock, which is the lender’s guarantee of a quoted interest rate at closing, even if the market goes up or down.

Each lender has their own process for locking in your mortgage rate once you’ve received a quote. My refi lender asked me for written confirmation of my salary and the rate and length of time I agreed to lock on the day I planned to secure the lock. I dutifully emailed my salary information, but mistakenly assumed that signing the loan disclosure was tantamount to agreeing on the rate and term.

I went about my business, ignoring the fact that the lender needed all three pieces of information in an email from me. My fate was sealed after my loan originator never followed through when he didn’t receive written confirmation of the rate and term I intended to lock.

By the time my loan was processed about three days later, market rates had jumped. Since I hadn’t unintentionally locked in my rate, I would have had to pay higher monthly payments and more interest. My initial rate was 3.125%. By the time my documents were filed, they had gone to 3.25%, which I thought I had locked in. But, once the loan was being processed, the market had risen to 3.5% interest and my refi no longer made financial sense. .

“Communicate, communicate, communicate. I can’t stress that enough,” said Debra Johnson-King, member of Bankrate’s financial review board and community development manager at The Mortgage Firm. “You really need to stay on top as a customer, but more than that, your loan officer really needs to make sure you stay on top.”

She pointed out that each lender has their own process for locking the rate, but borrowers should stay up to date with their loan officers and confirm the rate is locked as soon as possible.

Did I have recourse to retroactively block my rate?

Unfortunately, I couldn’t do much. Although the loan officer was not as forthcoming as he perhaps should have been, it was my fault for not following the lender’s policy to the letter. In theory, Johnson-King told me, my loan officer could have honored the rate he quoted me in the loan disclosure by sacrificing a profit margin, but lenders have no obligation to do so.

“As the customer, you can’t lock the rate, the loan officer has to lock the rate,” she said. “Once they saw that, maybe if they sent you some documents to sign and you didn’t sign them, they should have phoned you.”

To the lender’s credit, although they didn’t honor the rate they quoted me, they at least refunded the fees I paid upfront, although that money is technically non-refundable.

Although I was disappointed that my refi failed, I was certainly happy to recoup hundreds of dollars in application fees for a loan I would never receive. I was also willing to put in more effort to get that money back, and Johnson-King said that would have been the way to go.

“You can ask to speak to the manager or call a superior and explain,” she said. “If it’s really, really obvious it was the loan officer’s fault, then maybe the manager could step in and move on and honor that.”

What to pay attention to when applying for a mortgage loan

As a loan applicant, it’s important to read every letter of every document you receive to make sure you don’t miss any important steps. But, Johnson-King said, finding a lender and loan officer who takes a hands-on approach to guiding you through the application process can be even more crucial.

“Work with someone who suits your style,” Johnson-King says, and she advises all loan originators to be careful when assessing their clients’ knowledge and comfort level with the process. .

Be sure to check in with your loan representative at key points in the process:

  • Once you receive your quote
  • As soon as you submit your documents to confirm your rate lock
  • After the estimate of your house
  • before closing
  • Anytime you have a question

At the end of the line

It can be easy to get bogged down in paperwork and miss important steps when applying for a loan, and these little oversights can cost you money. Don’t be afraid to ask your loan officer questions and call if you don’t think you’ll get a timely response. Mortgage applications are extremely time sensitive, after all.

And if you and your author aren’t on the same page, Johnson-King said, you can move on.

“What I tell my clients: you are the captain of this ship,” she said. “If you don’t like the vibe you get from the loan officer you work with, go to someone else.”

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