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Refinancing Closed, Part I: Closing Details

Contributed by mm | April 29, 2004 11:13 AM PST

(As I wrote in this blog 30 days ago, I am in a process of refinancing my mortgage from a 7/23 4.25% balloon loan to 5/1 3.50% ARM. I successfully closed this deal today. I'm going to summarize some thinkings from this experience in a few posts and here is the first installment regarding closing details.)

First, something about the closing process. EverBank, as an out-of-state bank (its mortgage division is located in Florida), contracted First AMerican Title Insurance Company National Lenders Advantage ("First American Title") to do the actual closing work (First American Title is also the title insurance provider to this transaction).

The real closing work is actually done in my house. The day before, First American Title sent me an fedex package of all the paperwork for my review, and a sealed envelop containing the actual documents I need to sign, waiting to be opened by the agent. This morning, the agent comes and open the envelope, then ask me and my wife to sign all the documents.

We actually signed 17 documents:

- Settlement Statement (HUD-1)
- Servicing Disclosure Statement (EverBank will service the loan, but may securitize this loan and sell to third party)
- Notice of Right to Cancel (I have three days cooling period, during which I can void the transaction)
- Mortgagor's Title Affidavit (Swear that we have the exclusive ownership of the property and all bills are paid on time)
- Truth In Lending Disclosure Statement
- Fixed/Adjustable Rate Note
- Affiliated Business Arrangement Disclosure Statement (EverBank may has business relationship with third-party service providers and EverBank may receive a kick-back)
- Deed of Trust
- Planned Unit Development Rider
- Fixed/Adjustable Rate Rider
- Borrower's Closing Affidavit
- Name Affidavit (I am who I am)
- W-9 Form (verify SSN)
- Date of Birth Affidavit (certify my birth date is what I gave in the application)
- Initial Escrow Account Waiver (no need to pay to escrow accounts every month but I need to pay all taxes and insurance premiums and send receipts to EverBank)
- Attorney Representation Notice and Arbitration Agreement (so attorney can perform deed, note, security instrument, release and assignment of lien)
- Correction Agreement (if necessary I need to send additional fees or documents)

And as I read thru the HUD-1 statement last night, my real cost to do this refinancing turns into $1,833.56, which is very close to the original quote. Here are the details of the items I paid for:

Paid to ABN AMRO - Previous Lender  
Recording Fee  $            19.00
Fax/Statement Fee  $            30.00
Subtotal  $            49.00
   
Paid to EverBank and Third Party  
Appraisal Fee  $          295.00
Credit Report  $              6.50
Tax Service Contract  $            74.00
Flood Certification Fee  $            15.50
Underwriting Fee  $          325.00
MERS Registration Fee  $              3.95
Courier Fee  $            35.00
Settlement/Closing Fee  $          350.00
Title Insurance  $          403.00
Attorney's Fee  $          125.00
Courier Service II  $            35.00
Tax Research  $            35.00
Subtotal  $       1,702.95
   
Paid to Government  
Record Security Instrument  $            44.00
Title Insurance Sales Tax  $            35.46
Subtotal  $            79.46
   
Other Adjustments I  
Total Accrued Interest Paid to ABN AMRO  $       1,054.78
Minus:  
  Interest Due for April If Not Refinanced  $         (881.00)
  EverBank's Contribution of Interest  $          (71.63)
Subtotal  $          102.15
   
Other Adjustments II  
EverBank Bonus For Quick Document Return  $         (100.00)
Subtotal  $         (100.00)
   
Total Real Cost of Refinancing  $       1,833.56

A few notes to the statement:

1) Other Adjustments I

ABN AMRO charges for interest at 4.25% from the date of my last payment (April 1) to the funding date (May 3), the latter is three days after 3-day cooling period for a total of $1,054.78. If I hadn't done this refinancing, I would need to pay $881.00 in interest by May 1 (along with principal and escrow payments), so $881.00 is not the cost of doing refinancing. In addition, EverBank put in some additional interest because it only provides on May 3, and in my first payment to EverBank I need to pay interest to cover the entire month of May.

2) $100 Bonus

When EverBank sent me the initial loan application package, there is a coupon saying if I return the completed loan application within 10 days, I am eligible for a $100 bonus. This is a good feature to encourage people to return materials early and meet the 30-day rate lock. It works fine for me.

3) Escrow Is Waived

I am glad that the need to escrow is waived. That means I have more cash flow control over payments like property tax and insurance premiums. In addition, SafeCo insurance premium can be paid online by credit card, adding a couple of dollars of cashback rebate from my credit card company.

4) One Surprising Item

One surprising item in the settlement statement is I was asked to pay around $1,700 for property tax. Apparently it is a timing mismatch, because my previous lender ABN AMRO paid the semi-annual property tax bill in early April and it does not get reflected in the tax record on time, causing the closing company to think I need to pay the property tax again. It caused a short term cash flow issue, but it does not hurt my net worth anyway.

Overall, there is no surprise in the whole process (and I commend EverBank for the work, although the loan officer is not as responsive as I expect). It is a sweet deal in all aspects (and this is what I will put together in the second installment of this series).

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