I bought my house in November of 2018 and refinanced from 4.875% to 3.875% in June of 2019. The whole process was easy and took a little over 1 month. In August of 2020, I tried to refinance my home again to go from 3.875% to 2.5%. SIX months later, I am still trying to refinance. Interest rates were historically low. As someone who uses a HELOC, or Home Equity Line of Credit, for the purpose of Velocity Banking, I was a little concerned. Prior to the refinance application, I paid off $30,000 in extra principle in the first half of 2020. After shopping around for quotes, I found out that some lenders will require you to pay off your HELOC and get rid of it before refinancing. I wanted to keep my HELOC so I had to cross off a few lending companies right off the bat. I ended up going with Titan Mutual Lending as they offered the lowest rate without points and they allowed me to keep my HELOC. As soon as I applied in August 2020, they let me know that it was going to take 40 to 60 days to refinance since they are so busy. Every lender I spoke with said the same thing. Due to the historic low rates, everyone and their grandmother was refinancing their mortgage.
Subordination
When you refinance a home, your new lender will pay off your old loan. It turns out that if you have a HELOC when your mortgage is paid off, your HELOC is turned into the priority lien. That means if I go bankrupt, I have to pay off the HELOC before the mortgage. To avoid this, lenders send banks (who hold your HELOC) a subordination. This is like a letter of approval to bump your HELOC down to second priority, so that your new refinanced mortgage is the number one priority lien on your home. This process can take 4 to 6 weeks and it didn’t start until October of 2020.
Changing Vendors
After waiting a few months, they finally sent me the rate lock agreement for a 2.5%, 30 year mortgage. Happy New Years, Titan Mutual Lending let me know that they are changing vendors and that I would need to reapply for the refinance with their new online application system. In January 2021, after months of repeated promises that I will close by the end of the month, I re-applied for a refinance with Titan Mutual Lending using their new online portal. I noticed many errors and inconsistencies with the new loan estimate. My loan officer told me to sign and ignore the numbers as they will be corrected and up to date by closing. It sounded fishy, but I signed. I was fed up so I also applied with other lenders who offered slightly worse rates at 2.7% and 2.8%. The race is on.
Closing Cost Estimates & COVID
I should also mentioned that they sent me the estimated closing costs to sign three times over the past 7 months. Each time, I mentioned the errors in the document. Each time they told me not to worry as it will be updated when we are ready to close. There was even a period of time when they were not answering my emails and phone calls for weeks. It turned out that my loan officer had COVID and was out of office for some time.
Changing Loan Officers
By late January, I was informed that the loan officer working on my file was no longer with the company. I don’t know what happened to him, but I hope that he survived COVID. I was assigned a new rep who asked me to resubmit my documents. She wanted my bank statements, W2, HELOC statements, and everything else I submitted to my prior officer. Here we go again.
Another Subordination
Because they changed their systems, they had to resend the subordination for my HELOC and told me again that it will take 5 to 6 weeks. Luckily my bank works fast and they completed the subordination request in 1 week. Around mid-February, Titan Mutual Lending said they needed proof that my HELOC was paid off, even though they told me I can keep my HELOC and I don’t need to pay it off. At this point, my HELOC had a balance of $0 for a few weeks. I sent them my statements showing that I owe nothing and I gave them permission for another credit check. Still, they wanted to see 12 months of transactions from the transactions page of my HELOC account. This was a weird request, but they said they need it to close. I was worried they would ask many more questions when they saw how much I used my HELOC (for Velocity Banking). I ignored the email and did not send them the transaction history.
The Closing Date
On Friday, February 19th, they finally called me to schedule the closing date. It was set for Monday, February 22nd. They sent me the final closing costs to sign, but guess what? They never fixed the errors I reported three times before. They said I have to wait 72 hours to correct the closing costs and another 72 hours notice to schedule the closing. Now they want to push the closing date into March 2021, Month 7 of my refinance journey. I can’t believe I already missed out on 6 months of savings from this refinance. At the last minute, they were able to keep the February 22nd closing date.
Closing Surprises
The lender did not send the “corrected” closing documents to the notary until our set appointment. For that reason, the notary was 2 hours late in getting to my house. We were already in bed when we heard the knocking at our front door. We sat down to review the documents when I immediately noticed that nothing was corrected. My wife’s name was spelled wrong in two different ways throughout all documents and I saw a surprise charge of just over $2500 (1.125) in points. When I signed my rate lock back in October 2020, there were no points. At no point in time did Titan Mutual Lending tell me that they were going to add points to my loan to keep the rate down to 2.5%. I called them and they said there is nothing they can do. They told me I can walk away, sign, or delay closing so that they can give me a rate without points, which they said would be around 3%. I signed the closing documents, but I did not pay the closing costs. I documented every email and every electronically signed document and wrote a letter to the upper management team at Titan Mutual Lending. Ultimately, they couldn’t deny anything and they gave me a closing cost credit to get rid of the points cost. My nightmare is finally over and my house is finally refinanced with a first payment due date of April 1st, 2021.
2021 Refi Expectations
If you want to refinance in 2021, expect it to take up to 6 months. My closing costs were high because I had to fund my new escrow account and pay for 6-12 months of taxes and insurance ahead of time. I will get a refund for my old escrow account in a few weeks. Expect the same to happen to you if you are trying to refinance with an escrow account. If you have a HELOC, try to pay it off first and leave it at a balance of zero for two months before refinancing your mortgage. This will make the refi process quicker. Shop around for lenders and choose your top three. Apply with your top 3 lenders at the same time and choose whoever schedules your closing date first. I chose to stick with Titan Mutual Lending for too long before applying with other lenders. Finally, read the documents carefully and don’t sign anything until they correct the documents. Don’t let them pressure you into signing with their threats of delaying the process. I fell into this trap and learned my lesson. With my new low rate, this is the last time I intend to refinance my mortgage. I will spend the next 4 years trying to pay off my house completely using my HELOC and Velocity Banking. If you want to follow my Velocity Banking Journey, follow my progress here. Did any of you try to refinance your mortgage in 2020 or 2021? How as your experience? Comment below.
