Scrutiny
Posted on May 21, 2007 - Filed Under Business |
The hour was 10:30 a.m. on Friday. The Escrow office called; the documents were ready to sign.
Seated in the office, the paperwork started. My signature was imprinted itself on form after form. Until I got to the closing costs sheet.
The number was too high.
Going in, I knew the ball-park figure of what I would have to pay. This number they were providing far exceeded that.
There were two charges not taken into consideration.
First: the mortgage payment. Depending on where escrow falls during the month, the bill for the mortgage comes due either right away or the following month. Usually if it falls during "the following month", people claim they get a month for free. Not so. They pay this as part of their closing costs. So this means my first mortgage payment will not be due until July 1st. Ok, this is not so bad.
Second: Paying a point. The reason why the loan was setup for paying of points is beyond me. The loan had a 6.125% interest rate. Pretty good. The sacrifice for this rate: paying down a point. The price tag: over $4500.
The difference in the mortgage payment would be a little over $100 per month. While that may be something to get excited about, the return on that $4500 would be slow. If you think about it, almost 5 years would have to pass before the benefit of paying the $4500 would be realized. Also if I were to refinance anytime during those five years, then this point being paid would essentially become lost.
For the uninitiated, "paying down points" refers to the customer paying a percentage of the financed portion of the purchase in exchange for a lower percentage rate. So for a payment of 1% of the portion financed, the client would be 1/8th percentage point break or 1/4 or whatever the scale happens to be.
To be perfectly blunt, I know of no one who has ever paid points on a loan.
The loan docs are being rerun. Today I’ll receive another phone call from Escrow. I will, once again, go in and sign more documents. But the $4500 will stay in my pocket.
Yes, I am extremely annoyed this occurred. My objective was to have all the papers signed last week. Today, my bank would wire the funds to the escrow account and all I would do is sip champagne. Instead my morning will be spent driving here and driving there.
On a good note: on Friday the squatters had a trailer filled with their belongings ready to go.
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2 Responses to “Scrutiny”
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What terms did the GFE and TIL show? Was there a rate lock? Did you get anything in writing? I would not be happy with a lender that tried to slip this past me at the closing table, if that is what happened.
Hope the squatters are out and that you had a serious talk with that lender…
Well you learn something new every day.
I had no idea what GFE or TIL was. Looking back through my notes, I never received a Good Faith Estimate or a Truth in Lending form from the lender.
I just made a mental note that in the future, I will state that I will not be paying any points.