Mortgage Refinance Nightmare

[arrowheadnation]

I'm pretty sure I already know what's going to happen, but figured I'd see if there are any loan officers on here that might be able to give me an educated opinion.

I bought my home 4 years ago at 4.45% APR. I had a couple issues during that time and my credit score fell from good to OK (mid 600's). Last year when everyone was refinancing, I knew it would be better for me to wait until I got my credit score back up to get the lowest rate. A couple months back, my dad died and I inherited a decent sum of money. I was able to pay off all my debts and get my credit score back to 720. I then filled out a loan/refi application and got everything done (new rate of 3% w/ $126k loan). I closed on Tuesday of this week. I was informed by my employer today (Thursday) that my position is being moved to our support desk in India and that my last day of employment will be on June 30.

I'm not super worried about being laid off because there are tons of places hiring right now. My question for you all is...will my loan probably be terminated now once I inform the officer of the news or will my unique position (below) save me? I'm hoping that I can make a case for keeping it as I currently have no debt other than my mortgage and utilities, with my inheritance, I have immediate access to enough cash to more than pay off the home (what I will probably do in the next few years), on top of that I'm getting a $20,000 severance from my current employer.

Thanks for any help.

[Donger]

1) I'm sorry to hear about you losing your job.

2) If you're closed, you're closed.

[oldman]

I'm not a loan officer, but I question why you'd have to inform your loan officer. You accepted the loan in good faith and the lender made the loan in good faith. Let sleeping dogs lie.

[arrowheadnation]

I should also include that I was aware a couple weeks ago that there were going to be layoffs which I didn't disclose during the application process because I didn't think there was any chance it would effect me. But it did. I've been trying to do some reading on this, but can't find the exact situation. I just want to avoid any fraud charges or crap like that.

[wazu]

If you've closed and they want to terminate your loan then just thank them for relieving you of having to make any more payments.

[Donger]

I should also include that I was aware a couple weeks ago that there were going to be layoffs, but I had no idea it would include me. In fact, I didn't think there was any chance it would include me. But it did. I've been trying to do some reading on this, but can't find the exact situation. I just want to avoid any fraud charges or crap like that.

You're clear. It makes no difference if you lose your job right after closing or next year.

[luv]

If you're employed at the time of closing, I wouldn't say anything to the loan officer if they've already contacted your employer.

REREAD: You're already closed. No reason the loan officer needs to know.

[htismaqe]

You're clear. It makes no difference if you lose your job right after closing or next year.

This. Your employment status only applies at the time of your loan application. If you've closed, you're under no obligation to report the loss of your job. Make your payments and they'll never know.

[Donger]

Did they contact your employer and ask the "How secure is this person's employment" question?

[htismaqe]

Did they contact your employer and ask the "How secure is this person's employment" question?

I'm no expert but one would think they would have denied his loan application if his employment status were questionable, no?

[arrowheadnation]

Did they contact your employer and ask the "How secure is this person's employment" question?

I guess so, they didn't say anything at closing. I probably should have said that I was aware that layoffs were coming, but I honestly didn't think it was going to effect me.

[Donger]

I'm no expert but one would think they would have denied his loan application if his employment status were questionable, no?

Neither am I, but I'd say yes.

[Donger]

I guess so, they didn't say anything at closing. I probably should have said that I was aware that layoffs were coming, but I honestly didn't think it was going to effect me.

Well, if they did and your employer told them that you were going to be let go, be very thankful you closed anyway.

But you're still fine. Don't worry about it. Just make your payments.

[MahomesMagic]

I was in the business more than a decade ago.

As long as you were truthful on the application at the time you applied you should be fine.

[Ming the Merciless]

once youre closed its all good.

[luv]

I know someone whose daughter was getting ready to close on a house. Had everything lined up and ready to go. The loan officer just had not gotten anything back on the employment verification. Whenever they called them, the employer told the loan officer that they were getting ready to lay her off, and that's how she found out. Lost out on the house.

[Donger]

once I inform the officer of the news

Just saw this. No. Bad.

Even though he'd probably say "Oh well. Enjoy your mortgage."

[prhom]

You didn’t know anything for a fact at the time of closing so you didn’t pull anything wrong here. Besides you said you have enough inheritance to cover it anyway so the loan might have closed anyway.

[EPodolak]

Nothing fraudulent on your part. If you were laid off before you signed the loan and records could confirm it, that might be different. Also, did they know of your inheritance and the amount?

[mr. tegu]

Yeah you are closed if your closed and it’s a done deal. Though it seems you didn’t get a very good rate unless your refinance was for 20 years or more. We recently did ours and banks where begging to have us. All of them kept saying send me the initial disclosure and we will match or beat it and we certainly didn’t have cash on hand to pay it off. We ended up with 2.3% though it is ten years.

[InChiefsHeaven]

Everyone has a chance to lose their job. Even if you knew layoffs were a possibility, well...it's ALWAYS a possibility. And since you've closed, you are good to go. I wouldn't even mention it.

I bought my house and lost my job 2 weeks after we closed. Didn't matter, we already got the house. Of course, paying for it became a problem, but we got the house.

You're good.

[InChiefsHeaven]

Yeah you are closed if your closed and it’s a done deal. Though it seems you didn’t get a very good rate unless your refinance was for 20 years or more. We recently did ours and banks where begging to have us. All of them kept saying send me the initial disclosure and we will match or beat it and we certainly didn’t have cash on hand to pay it off. We ended up with 2.3% though it is ten years.

I just got 2.7 for 15.

[The Franchise]

Don’t tell your loan officer shit. Your loan is closed. Make your payments and you’re good.

[Hammock Parties]

Was just reading up on this last night.

Never disclose more information than you have to.

[Buehler445]

1) I'm sorry to hear about you losing your job.

2) If you're closed, you're closed.

Yep.

It would take a hell of a lawyer to prove fraud in the signing of the contract, if it's even possible at all.

As long as you make the payments nobody will give half a fuck. Ever.

[Jewish Rabbi]

Send the loan officer a fuck pie so they have a favorable opinion of you.

[Saulbadguy]

Burn your house down ASAP and collect those fat insurance checks.

[DaFace]

I guess so, they didn't say anything at closing. I probably should have said that I was aware that layoffs were coming, but I honestly didn't think it was going to effect me.

Others have said it, but just to make it's absolutely clear:

You have zero obligation to the lender here. The mortgage is closed and cannot be rescinded or modified. Do not contact them. Move on with your life and enjoy your mortgage with its lower interest rate.

Good luck with the job hunt.

[Jewish Rabbi]

Burn your house down ASAP and collect those fat insurance checks.

Inmen can help with that.

[Sassy Squatch]

Yeah you are closed if your closed and it’s a done deal. Though it seems you didn’t get a very good rate unless your refinance was for 20 years or more. We recently did ours and banks where begging to have us. All of them kept saying send me the initial disclosure and we will match or beat it and we certainly didn’t have cash on hand to pay it off. We ended up with 2.3% though it is ten years.
That won't be a problem nowadays for banks LMAO.

[caseyl4200]

I agree that once closed the loan is yours. In fact if you are paying PMI (primary/principle mortgage insurance) I believe that could cover your payments while you are out of work. That would be the reason to talk to your loan officer.

[TambaBerry]

I agree that once closed the loan is yours. In fact if you are paying PMI (primary/principle mortgage insurance) I believe that could cover your payments while you are out of work. That would be the reason to talk to your loan officer.

PMI is nothing for the person who took the loan out. It's only for the lender to have a safety net in case you stop paying

[Kiimo]

You don't even need a VOE if your credit score is high enough.


Hell back in the day the NINA loans were crazy. I mean before the crash of course.



Also Private Mortgage Insurance is a horseshit fee that should be illegal.

[BigRedChief]

Don’t tell your loan officer shit. Your loan is closed. Make your payments and you’re good.

Your unemployment will be reported to credit agency’s. Banks have live access to your current info. They are going to know. But, it’s closed so fuck them. Don’t tell them shit.

[Why Not?]

Never disclose more information than you have to.

I find this to be helpful about most things.

[Bearcat]

Also Private Mortgage Insurance is a horseshit fee that should be illegal.

Banks shovel money at people who can't afford to pay it back.

Banks die.

Banks come back to life, but need some protection from the mean people who sign on the dotted line!

It's such a fucking scam.


I bought a house a few years after the crash and the bank told me multiple times they give me quite a bit more. :facepalm:

[The Franchise]

Your unemployment will be reported to credit agency’s. Banks have live access to your current info. They are going to know. But, it’s closed so fuck them. Don’t tell them shit.

They are only going to know if someone tells them. If he’s making his payments on time....they won’t give a fuck.

[Buehler445]

Banks shovel money at people who can't afford to pay it back.

Banks die.

Banks come back to life, but need some protection from the mean people who sign on the dotted line!

It's such a fucking scam.


I bought a house a few years after the crash and the bank told me multiple times they give me quite a bit more. :facepalm:

Don’t blame banks. Blame the government. Home loan lenders are merely monkeys filling out a government form.

My buddy, 6 months out of college. Not much money but a decent job for 24 applied for a home loan on 110K (IIRC). Approved. Right before closing a house came up cheaper than the approved house 90K IIRC, similar appraisal numbers but a better fit. Fucking denied. Had to borrow some money from her parents for a bigger down payment.

110 - sure.
90 - fuck off.

What?

[Rain Man]

If you can pay off your house, why are you paying to refinance? Put the mortgage to the torch.

[dlphg9]

If you can pay off your house, why are you paying to refinance? Put the mortgage to the torch.

I'm with Rainman. Why would you be giving the bank money? If your loan was just 5 years long at the terms in OP, then you are paying the bank just under $10k in interest...

Fuck that

Is there a reason why you don't want to pay it off now?

[Lzen]

I'm with Rainman. Why would you be giving the bank money? If your loan was just 5 years long at the terms in OP, then you are paying the bank just under $10k in interest...

**** that

Is there a reason why you don't want to pay it off now?
If I had to guess, I'd say that the inheritance wasn't enough to pay for a house. Because you're right, if it was enough, I would pay off every bit of debt that I could, including my house.

[arrowheadnation]

If I had to guess, I'd say that the inheritance wasn't enough to pay for a house. Because you're right, if it was enough, I would pay off every bit of debt that I could, including my house.

This is correct, it's just about enough, but it would leave me basically broke. That's why I wanted to refinance to lower the payments and then once I get enough saved up (hopefully in the next year or so), pay the house off and be 100% debt free, other than normal monthly bills/utilities.

[mr. tegu]

This is correct, it's just about enough, but it would leave me basically broke. That's why I wanted to refinance to lower the payments and then once I get enough saved up (hopefully in the next year or so), pay the house off and be 100% debt free, other than normal monthly bills/utilities.


What’s the interest each month? I’m not a financial wizard but I would guess most would tell you to pay it off if you can and tighten the belt for a few months. Unless you literally couldn’t afford to eat.

[Jewish Rabbi]

This is correct, it's just about enough, but it would leave me basically broke. That's why I wanted to refinance to lower the payments and then once I get enough saved up (hopefully in the next year or so), pay the house off and be 100% debt free, other than normal monthly bills/utilities.

If that was the plan, you probably won’t come out ahead after refinancing costs.

[BigRedChief]

They are only going to know if someone tells them. If he’s making his payments on time....they won’t give a ****.Thats just not true. I worked on moving an application that does that exact task. Nothing illegal or immoral. People can fake a W2 or paystub. You signed a paper saying the bank has a right to this information when you requested a loan or refinance. It's no different than a credit check.

[Yosef_Malkovitch]

I am a lawyer. I used to represent banks in foreclosures. The vast majority of them were foreclosed because the borrower stopped paying, but technically they could foreclose for other reasons.

I can tell you from experience that, as long as the mortgage payments are coming in each month, the banks don't really care where the payments are coming from. Unless there are other factors in play (like if the bank wants your house for some other reason) they are not usually going to spend the time, trouble, and money to foreclose on your house as long as the payments are being made each month.

[arrowheadnation]

What’s the interest each month? I’m not a financial wizard but I would guess most would tell you to pay it off if you can and tighten the belt for a few months. Unless you literally couldn’t afford to eat.

it's 3% over 30 years. I'm refinancing to get a lower payment. I plan to pay it off in full in the next 3-5 years. I can't do it now because, it would leave me with less than $2000 and my 401k which isn't nearly enough to live on (especially with losing my job). Plus, I have a sportscard collection worth over $200,000 that I plan on selling a chunk of to pay off the house. Plus I'm thinking about opening a sportscard/memorabilia store as my next gig and want capital on reserve in case I need it. With the refinance, my monthly payment goes down to $900 which means I have to bring in even less each month to survive comfortably, so paying the house off right now just doesn't seem like the right thing to me. I have a large chunk of my inheritance with Edward Jones right now and I'd like to leave it there. With it, my 401k, and pension from my soon to be former employer, I'm hoping to shave some years off of retirement. We'll see what happens. Thanks for all the advice, I appreciate it. I still haven't decided what I'm going to do, I just don't want to be accused of mortgage fraud.

[tyecopeland]

it's 3% over 30 years. I'm refinancing to get a lower payment. I plan to pay it off in full in the next 3-5 years. I can't do it now because, it would leave me with less than $2000 and my 401k which isn't nearly enough to live on (especially with losing my job). Plus, I have a sportscard collection worth over $200,000 that I plan on selling a chunk of to pay off the house. Plus I'm thinking about opening a sportscard/memorabilia store as my next gig and want capital on reserve in case I need it. With the refinance, my monthly payment goes down to $900 which means I have to bring in even less each month to survive comfortably, so paying the house off right now just doesn't seem like the right thing to me. I have a large chunk of my inheritance with Edward Jones right now and I'd like to leave it there. With it, my 401k, and pension from my soon to be former employer, I'm hoping to shave some years off of retirement. We'll see what happens. Thanks for all the advice, I appreciate it. I still haven't decided what I'm going to do, I just don't want to be accused of mortgage fraud.

You needed to see if the savings in interest would be less than the refinance fees if you are planning on paying it off that quickly.

[Bearcat]

If you can pay off your house, why are you paying to refinance? Put the mortgage to the torch.

I struggle with this exercise in my head, because I've always thought it would be amazing to have the financial freedom that comes with no car payment (and that is really great), no mortgage payment, etc.

However, if I had whatever extra amount each month that added up to say $10k off the top of a mortgage, is that $10k working better for me in my 401k or other investments over the period of time it would take to pay off the loan?

And if you can get ~3-4% on a loan, the answer should be yes, most of the time.... and of course, as long as the refinancing fees make sense for that amount of time as well.

[DaFace]

I struggle with this exercise in my head, because I've always thought it would be amazing to have the financial freedom that comes with no car payment (and that is really great), no mortgage payment, etc.

However, if I had whatever extra amount each month that added up to say $10k off the top of a mortgage, is that $10k working better for me in my 401k or other investments over the period of time it would take to pay off the loan?

And if you can get ~3-4% on a loan, the answer should be yes, most of the time.... and of course, as long as the refinancing fees make sense for that amount of time as well.

It's definitely one of those areas where the "best" thing to do isn't 100% clear. In terms of pure math, you're right that it's likely better to invest the money rather than paying off the house. However, there's no doubt that there's a mental boost from eliminating such a huge obligation, so even a hardcore numbers guy like me would struggle to not just pay it off if I could.

[Bearcat]

It's definitely one of those areas where the "best" thing to do isn't 100% clear. In terms of pure math, you're right that it's likely better to invest the money rather than paying off the house. However, there's no doubt that there's a mental boost from eliminating such a huge obligation, so even a hardcore numbers guy like me would struggle to not just pay it off if I could.

Yeah, and in a case where there's a real risk of pulling money from a 401k early versus paying off a loan in full, the tax hit on the former would wipe out any benefit plus some.

So, an emergency fund comes into play, where even if you're breaking even between mortgage interest and say an investment where you have access to your money within a week without penalty, it could be better than the alternative of additional mortgage payments (unless you can pay off the loan in full).

That financial freedom is hard to pass up though.

[ClevelandBronco]

Everyone who has told you not to worry and not to talk with your lending institution is out of their minds. However, they’re also 100% correct. You’re good to go on the mortgage. They’re out of their minds for other reasons entirely.

[luv]

I struggle with this exercise in my head, because I've always thought it would be amazing to have the financial freedom that comes with no car payment (and that is really great), no mortgage payment, etc.

However, if I had whatever extra amount each month that added up to say $10k off the top of a mortgage, is that $10k working better for me in my 401k or other investments over the period of time it would take to pay off the loan?

And if you can get ~3-4% on a loan, the answer should be yes, most of the time.... and of course, as long as the refinancing fees make sense for that amount of time as well.

Plus, long term debt (with on-time payments, of course) helps to boost your credit score, as well. I paid off an auto loan a year early, and I took a few points dip in my credit score for closing an account.

[Rain Man]

Yeah, and in a case where there's a real risk of pulling money from a 401k early versus paying off a loan in full, the tax hit on the former would wipe out any benefit plus some.

So, an emergency fund comes into play, where even if you're breaking even between mortgage interest and say an investment where you have access to your money within a week without penalty, it could be better than the alternative of additional mortgage payments (unless you can pay off the loan in full).

That financial freedom is hard to pass up though.


That's a really good point.

I think it's been discussed in other threads about paying off a loan versus investing it instead. Maybe it depends on some things like age and other assets. I just find that having my home paid off is a grand feeling that money can't buy.

[mr. tegu]

I just find that having my home paid off is a grand feeling that money can't buy.

Oh you.

[cwhocares]

There is and old quote that goes "Ask me no questions and I will tell you no lies".
I agree with Donger and Oldman.

[Ming the Merciless]

If you can pay off your house, why are you paying to refinance? Put the mortgage to the torch.


i know this is really popular right now with the whole Dave Ramsey show and other shows that give people this advice, but I completely
disagree with this in some cases. In many cases you are better off using that money that you would use for paying off your mortgage and
buying a rental property or some other investment and using 'leveraging' to make that money pay better than the % you are "saving".
There are also write offs like mortgage interest and depreciation from a second property. I am not saying its a terrible idea, but between
mortgage interest write offs , depreciation, other write offs and the appreciation of two properties instead of one, buying a rental property
can be a much higher return especially if you are younger. WIth interest rates very low (around 2%) right now there are many reasons to
consider trying to make more than 2% with that money. Just my opinion. Its not for everyone. Some people want to be extremely safe
and conservative and are happy with 2%. I am not one of those people and it has done me very well over 30 years.

[Shaid]

Average stock gains around 8% vs paying 2% on mortgage. I'd think invest the money. It'll double itself in 8 years. If you want to pay off the mortgage then, fine. Real estate, investments, etc. Let the money work for you and take advantage of what amounts to a 2% loan that you can make much more off of.

[Buehler445]

Yeah, and in a case where there's a real risk of pulling money from a 401k early versus paying off a loan in full, the tax hit on the former would wipe out any benefit plus some.

So, an emergency fund comes into play, where even if you're breaking even between mortgage interest and say an investment where you have access to your money within a week without penalty, it could be better than the alternative of additional mortgage payments (unless you can pay off the loan in full).

That financial freedom is hard to pass up though.

It doesn’t necessarily have to be a 401K.

I think if you’ve had a Roth for 5 years (IIRC) you can “borrow” the basis (contributions, not gain). Penalty free. You can also do a standard investment account, you’ll just incur cap gains tax if you need the money.

[arrowheadnation]

Figured I should put a bow on this thread for anyone who might be curious. Out of extreme fear of being accused of mortgage fraud, I went ahead and emailed my mortgage officer to tell her about getting laid off. She replied basically saying what a lot of you were saying. "Your closing is complete. Thanks for your business."

[DaFace]

Figured I should put a bow on this thread for anyone who might be curious. Out of extreme fear of being accused of mortgage fraud, I went ahead and emailed my mortgage officer to tell her about getting laid off. She replied basically saying what a lot of you were saying. "Your closing is complete. Thanks for your business."

https://media.giphy.com/media/VpN0ktVlMufU4/giphy.gif

[Lzen]

Figured I should put a bow on this thread for anyone who might be curious. Out of extreme fear of being accused of mortgage fraud, I went ahead and emailed my mortgage officer to tell her about getting laid off. She replied basically saying what a lot of you were saying. "Your closing is complete. Thanks for your business."

<iframe src="https://giphy.com/embed/qHjbXtxNawWR2" width="480" height="330" frameBorder="0" class="giphy-embed" allowFullScreen></iframe><p><a href="https://giphy.com/gifs/smh-qHjbXtxNawWR2">via GIPHY</a></p>

[htismaqe]

Figured I should put a bow on this thread for anyone who might be curious. Out of extreme fear of being accused of mortgage fraud, I went ahead and emailed my mortgage officer to tell her about getting laid off. She replied basically saying what a lot of you were saying. "Your closing is complete. Thanks for your business."

Dumbass.

ROFL

[Donger]

Figured I should put a bow on this thread for anyone who might be curious. Out of extreme fear of being accused of mortgage fraud, I went ahead and emailed my mortgage officer to tell her about getting laid off. She replied basically saying what a lot of you were saying. "Your closing is complete. Thanks for your business."

I was pretty close:

Just saw this. No. Bad.

Even though he'd probably say "Oh well. Enjoy your mortgage."

LMAO

[arrowheadnation]

Dumbass.

ROFL

I know, but it is definitely a relief not having it hang over my head.