Refi reniging on rate: normal or not?

[PetMom]

I had posted here about flood insurance being foisted upon us and that was taken care of.

What had been a double insurance policey for both our primary and second mortgage which
totaled over $1,000.00 (they chose the insurance company) is now a mere $200.00 which
covers both.

Now refi:

We got a locked in rate quote the day we applied over the phone with our morgtage co.

Things went along with needing appraisal/survey/verifications and documents gathering.

Meanwhile the bank is just trying to get us to hurry and get this done.

I thought that was curious, even to where a manager contacted us to tell us to hurry on,
oh but wait, they had some news.

Since our house appraised $20,000.00 lower (and it was standard market price for average home in good condition needing no repairs and I know what neighbors have gotten for their homes) than what they wanted to finance they are going to HAVE TO RAISE THE INTEREST RATE! Which had been technically locked in. Having said that and informing us of that they are just frothing at the mouth to get the paperwork in quickly in order to get this finalized.

Then saw commercial about 'lending tree' today about how banks don't always give you the lowest
rate possible. The commercial even states a bank will try to get the most they can from you.
Yet they can find the lowest rate - sure they are not going to do this for free either or they might
direct someone to a certain bank for a 'hidden' fee. Sort of chalked that off to clever advertising but now with what is happening to us am wondering.

And rate did go up above %5.00 percent this week.

But our locked in rate quoted weeks ago was lower than this.

Buyer or refinancer or insured beware should be the new quote nowadays.

[disneysteve]

Originally Posted by PetMom

Since our house appraised $20,000.00 lower (and it was standard market price for average home in good condition needing no repairs and I know what neighbors have gotten for their homes) than what they wanted to finance they are going to HAVE TO RAISE THE INTEREST RATE! Which had been technically locked in

There are always contingencies in the contract. The rate is based on risk assessment. If something turns up to alter the risk, that can certainly alter the rate. I don't think what happened was anything underhanded.

That said, you could certainly get some additional quotes if you think you can do better elsewhere.

[MonkeyMama]

Agreed with Steve - interest rates vary based on the loan to value ratio, etc.

Any lock agreement should state that the rate is subject to the final appraisal, and other information gathered during the refi process.

We've refied several times with no issues (always lock in the rate, first). BUT, last time we were really at the whim of the appraisal. In this market it is really hard to guess with so few homes selling. Anyway, appraisal came in about what I guessed, so it went smooth. But we were hoping for a 60% loan to value ratio for a particular low rate, and just had to cross our fingers that the appraiser agreed with the home value we estimated.