22 Nov
2011

Bank of America Agrees to ReFi – But Is It Really That Helpful?

I called Bank of America on Monday, November 22, 2011 to see if they would refinance me through the HARP program, now that they had the official documentation.

The answer was “Yes!” and I swear my heart was pounding as I got closer and closer to what seemed like the impossible after all these years.

First, The Good News

1. They pulled my credit score and it was excellent.

785: Middle (they would be using this score)
794: High
778: Low

2. Bank of America verified that I do not have LPMI.

Now, The Questionable News

1. I qualify for the loan, but the percentage is not that great. They say, because of my 2nd mortgage.

2. While the appraisal fee of $425 is “waived” (in other words, not required), there are still significant closing costs.

$ 382    1/4 of a discount point
$1175    Bank of America’s total fee
$1567    3rd party fee

$3124    Total closing cost
$  460   Out of pocket cost

This is what they offered:

30 year fixed – no prepay penalty
5.375% apr 5.490
1/4 of a discount point

$ 856    Principal
$ 264    Escrow
$1120    Total

Current 1st Mortgage

30 year fixed – no prepay penalty
6%

$ 988     Principal
$ 300     Escrow
$1288    Total

$168     Monthly Savings

Concerns

1. If I pay the $460 closing cost, is it possible that Bank of America could still deny the ReFi? What happens to that $460?

2. $3124 in closing costs will take 2 years to recoup. I suppose it’s worth the $120/mo advantage I’ll have on my mortgage, but I was really hoping for $200/mo less, and lower closing costs.

3. Fannie Mae values my house at $178,100. What? My Est. Tax Vaule is $140,000. Zillow is $125,000. My concern is that I will pay the $460 and even though Bank of America says I still qualify, I worry that later in the process they will say I am not underwater when they see that I owe $148,000 on my primary loan and $44,000 on my 2nd mortgage.

Documentation Required for Self-Employed

1. CPA will need to send a letter verifying:

  • How long I’ve been self employed
  • Name of the business, address, phone number and percent ownership

2. A copy of the declaration page from my home owners insurance.

They say there is no need to document year-to-date P&L.

Next Up: Mortgage Brokers – Can They Do Better?

1 Comment

  • That sounds pretty crappy to me. Hardly any better than your current mortgage! I wonder if it would be helpful for you to speak to a friend of mine who’s a mortgage broker. Used to run a gallery… she’s cool. Let me know and I’ll get you her info.