Question: I have been trying to refinance my home for six months. At one point I had a deal with a lender that offered a one-point discount for homeowners in low-income areas. But when rates jumped, we couldn't come to terms.
Then my loan officer contacted me about an additional discount of 0.25 percent that the bank was offering. My loan officer told me I qualified for both discounts and her boss concurred.
We verbally agreed upon a rate, and I immediately faxed my loan application under those terms. Within hours my loan officer called back and said the application was denied because I could not use both discounts.
I think that once I accepted the loan terms we had a deal that the bank is bound to. Or is this the old bait-and-switch?
Answer: Your problem provides us with great opportunity to pass along this advice concerning loan agreements from Earl C. Peattie, president of Mortgage News Co. in Santa Ana, Calif.: "If it's not in writing, it doesn't exist."
By your own admission, you did not have a loan agreement in the technical meaning of the term. What you had was a loan application based on terms that your loan officer told you would pass muster. Your real problem is that your loan officer apparently didn't know her business as well as she should; she misled you with erroneous information. Perhaps it's time for you to find a new lender.
And with interest rates dropping again you may find a deal that suits you at an institution that can give you the service you deserve.
Homeowners looking to refinance should try to lock in the interest rate they have agreed to for as long as they can.
In the last wave of refinancing frenzy earlier this year, loan departments were so swamped that processing routine refinancings were taking weeks longer than usual. If interest rates rose during the wait, lenders tried to pass on those %J increases. Your only protection against this is to secure a loan lock-in guarantee.
Some lenders will offer lock-ins at no extra cost for 30 days, a period that could prove worthless if it takes 60 days to process your loan.