Refinancing Your Home Loan: How to Know if Your Loan Officer is Giving You the Correct Numbers and Right Information

As an experienced loan officer who processes over a hundred home loans and refinances every year, I take pride in being efficient, accurate, and correct. This is not what consumers have come to expect from loan officers when it comes to refinancing and the estimates they receive compared to their actual rates and payments. 

“Why do the numbers change drastically?” This is a common question I receive from consumers during the refinancing process. My response is that it is the loan officers' job to do their absolute best to anticipate correct numbers for clients

One of the main statements I hear from consumers regarding refinancing is that the lender will quote numbers to and use the balance of the existing mortgage from the credit report. Every experienced loan officer should know that the balance is not a payoff and that the payoff is higher than the listed balance. If this isn't clarified to the clients, they will be surprised at closing with higher than expected numbers.

You deserve to have accurate numbers so you can plan accordingly and avoid surprises. On a refinance, in order to have a clear idea to figure out estimated prepaid items due at closing, the lender must know when the taxes and insurances come due or renew. 

Here's a general idea on how to estimate prepaid items on a refinance: 

  1. Take the month your first payment is due, in relation to the month when the bill is due
  2. Take the number 15 and then subtract the difference

Example: If your payment is due in January, and your bill (insurance/tax) is due in December, you'll take 11 payments from 15, which means that you would collect four months of escrow payments for that particular item. 

Working with a Loan Officer

Here are some common topics that you want to make sure are covered if you're trying to refinance. If the loan officer is running numbers for you, then he or she should be asking for this information

  • What’s the amount of your property taxes?
  • How much do you pay for home insurance? 
  • If you have flood insurance, and, if so, how much does it cost? 
  • What’s the amount of your city taxes? 

If your loan officer isn’t asking these questions and more, then they are giving you completely inaccurate numbers for your monthly payment as well as your cash at closing. Make sure to give them all the necessary information and question them if they are not asking you these questions. Once you are given the monthly payment amount, be sure to ask if it includes escrows and mortgage insurance. When you're provided with your cash-to-close amount, ask if the down payment, closing costs, and prepaid items are included.

What information would be helpful to you on your refinancing journey? 

  • How to know when to refinance your mortgage
  • How to refinance your mortgage
  • Mortgage refinancing explained
  • What is a “cash-out-refinance”?
  • How does a cash out refinance work? 

If you live in Louisiana, Arkansas, Mississippi, Alabama, and Florida and want to learn more about working with me on your mortgage, check out my other website

Want more about how to choose a mortgage lender you feel comfortable working with?

November 5, 2020
Mortgage Tips