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When the COVID-19 Homeowners Mortgage Tolerance Program was first announced last year, I insisted that we participate. As a food and travel writer, I knew I would lose income. In the worst-case scenario, we rely entirely on my wife’s income to pay the bills, and we need to cut expenses.
The mortgage tolerance program will cut our biggest bill as soon as possible. For the mortgage tolerance program, the lender will suspend payments for a specific time and reason. As far as we are concerned, this is a six-month global pandemic. Monthly payment will not be forgiven, just delayed.
It turns out that I retained about one-third of my revenue and attracted new customers throughout 2020, and suffered less financial losses than I originally expected. We actually saved money due to reduced expenditures and benefits under the CARES Act.
When the six-month grace period expires, we know we don’t need protection.At the same time, we are interested in refinancing our mortgage to take advantage of Interest rates hit a record low.
However, mortgage refinancing needs to follow a series of rules, documents and requirements, including first making at least three consecutive payments on time.
In fact, patience and refinancing are both complicated processes. Do one after the other: even more complicated. But it can be done.
The following are expectations when refinancing a mortgage in tolerance.
End the mortgage in tolerance
To end the mortgage tolerance, our lender gave us two options. We can pay missed payments in full or postpone them until the end of the mortgage.
We chose the latter option and caused a series of errors that eroded our trust in lenders and convinced us that we need to refinance to get rid of them.
Our mortgage lender has not processed our extension application for two months. At the same time, we resumed monthly mortgage payments in accordance with their instructions.
But the mortgage payment reached the deferred amount, not the balance. Our monthly report indicates that our payment was late and not applied.
We call mortgage lenders every week and spend hours on hold or transfer to different departments. A compassionate call center agent promises to learn more about the truth and call us back the next day.
This is not the first time our lender has misused payments.
Before we sent the escrow shortage check, I called for instructions to ensure that the payment was applied correctly. I followed their instructions, but they applied the check to my client instead of escrow shortage. They’re here again, messing up our payment-and possibly delaying the whole process by making it look like we didn’t pay in time. After tolerance, you need to pay on time for three months before you can apply for refinancing.
At the end of our rope, we filed a complaint with the Consumer Financial Protection Bureau. This attracted their attention. The top management solved the problem, but we planned to escape.
Financing after patience?It’s worth shopping around
When our three-month period ended, we used the comparison service to select four mortgage lenders and then compared interest rates and loan terms.
The three lenders provided online mortgage applications backed by Fannie Mae and Freddie Mac. We entered our income, debts, and assets — everything including retirement and bank account balances, my wife’s student loans and our car bill — and clicked send. Within an hour, we received calls from these lenders.
The following are the mortgage interest rates we offer for 30-year mortgages backed by Fannie Mae or Freddie Mac:
- M&T Bank: interest rate 2.875%, annual interest rate 2.998%
- Chase Bank: interest rate 3.375%, annual interest rate 3.602%
- Citizens Bank: interest rate 2.625%, annual interest rate 2.785%
- Local banks: The 30-year mortgage interest rate is 3.125, and the 20-year mortgage interest rate is 3% (These quotations are provided by phone and there is no document review.)
In each case, we need to pay settlement costs, and the lender estimates it to be between US$5,000 and US$6,000. Some require us to pay credit report or evaluation fees.
Since the interest rate on our 30-year mortgage is 4%, refinancing will not save a lot of money every month.But a low monthly payment is no longer our top priority Reasons to refinance our mortgage.
We are tired of the poor service of current lenders. We need to have a mortgage lender that we can trust, although it will take us about two years to recoup the costs we spent on closing costs and start saving.
In the end, we chose Citizens Bank because their new loan conditions are better, and we are all 10-year customers. Within one week of receiving the mortgage offer, we pledged to Citizens Bank to lock in our interest rate.
Tolerate refinancing time frame
In October 2020, we came out of the tolerance period, and in January 2021 we compared the purchase of refis. We locked in our new interest rate at the end of January.
Our new loan officer stated that we will close around April due to increased demand for refinancing and new home purchases. We will not hear any news for a long time, then there will be a series of information requests, and then we will end. At the same time, all we have to do is to pay the mortgage on time and avoid new debt or credit score changes.Oh, clear our current lender’s typo, it makes us look like we owe $80,000 more than our mortgage, something Marked by our credit report.
On March 23, we received a message: Our loan is being transferred to underwriting for preliminary approval. Due to the large volume of transactions, they expect to complete the transaction within 120-150 days after our initial application.
April became May. At the same time, my wife got a new job. If she changes employers before we refinance, we need to wait another 30 days due to their employment verification requirements.
The job opportunity lit a fire under our lender: a few hours after she notified the lender of the new job opportunity, our loan was conditionally approved.
The bank needs us to confirm the new loan terms, including homeowners insurance and the trusteeship of town taxes. We also need to confirm that our town tax has now been paid in full, provide an updated payroll and explain our side income.
My wife had to call the credit reporting agency and our current lender to verify that we did not pay any overdue mortgages.
It eventually received a few more calls, letters and confirmation letters, but on May 17, we officially refinanced.
Put mortgage tolerance behind us
The transition from COVID-19 tolerance to the refinancing process took longer than I expected. For a few days we had to give up everything, collect paperwork for our new lender, or shelve everything in an attempt to clean up our 27th mishandled account.
At the end of the day, our mortgage payment has been reduced by $100, but over the life of the loan, due to the lower interest rate, we will save $50,000. Stay away from a terrible lender I don’t trust and do anything right? That is priceless.
Penny Hoarder writer Lindsey Danis is a writer based in the Hudson Valley in New York, specializing in food, freelance advice, and personal finance. Her work has appeared in magazines such as Business Insider, NextAdvisor, and Greatist.
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