GFE Review for our Refi, please

[Phoenix-rising]

DH & I have gone to 2 lenders so far.  We first went to Wells Fargo.  We submitted a ton of information including divorce decrees, pay stubs, tax returns, insurance declarations, etc.  They tell us it will take around 2 weeks to get a GFE.

We then went to FBT Mortgage who only pulled our credit and then asked for our 2008 tax returns and my last pay stub to figure out my DTI%.  We already got a GFE from FBT, but it doesn't say how long it's good for.  The LO kept telling us everything is based on 80% LTV.  Our house will have to appraise at $300,000 for us to have 80% LTV.  Our appraisal was $264,000 back in 2006.  We've done some improvements and house values have appreciated in our neighborhood, but I don't know if it can appraise as high as $300k.

We asked the LO at FBT for GFE's based on my credit alone (high FICOs, 50%+ DTI) or a joint app with DH (lower FICOs, good DTI).

The interest rate using me as the single applicant (mid FICO of 774) was 4.625%.
The interest rate using a joint app (DH mid FICO of 705) was 4.875%.

Our present mortgage balance is a little under $240,000 with an interest rate of 6.375% on a 30 year fixed.  This GFE is also based on a 30yr fixed loan.

800 ITEMS PAYABLE IN CONNECTION WITH LOAN

801 Loan Origination Fee  $2,410.00

803 Appraisal Fee $350.00

804 Credit Report $22.00

809 Tax Service Fee $75.00

811 Underwriting Fee $275.00

812A Administrative Fee  $150.00

812B Courier  $40.00

812C Flood Cert  $17.00

812D Document Preparation  $200.00

1100 TITLE CHARGES

1101 Closing/Escrow Fee $400.00

1105 Document Preparation Fee $90.00

1108A Title Insurance $895.00

1108B Abstract Fee $100.00

1108C Title Endorsements $85.00

1108D Closing Protection Letter / Courier / Storage $50.00

1201 Recording Fees $315.00

Total Estimated Closing Costs  $5,474.00

ITEMS REQUIRED BY LENDER TO BE PAID IN ADVANCE:

901 Interest 15 days @ 30.5377= $458.07

TOTAL ESTIMATED SETTLEMENT CHARGES: $5,932.07

The total Estimated Monthly Payment breaks down as follows:

Principal & Interest $1,239.08

Hazard Insurance $234.74

Real Estate Taxes $96.92

Mortgage Insurance $107.90

Other $29.00

TOTAL MONTHLY PAYMENT - $1,707.65

What seems odd to me is there are no escrow costs shown in the Prepaid section, but it looks like it's included in the estimated monthly payment.  Did the broker make a mistake on the GFE and forget to add in 6 months of insurance & tax payments to escrow?  All our insurance payments and taxes are due in December.

[ShanetheMortgageMan]

Looks like the GFE is a solid one (given you and your wife's situations).  The reason that 80% LTV is needed is because no one is writing MI in declining markets (AZ or FL? I can't rememeber where you were at) unless you have an excellent DTI and stellar credit scores (think it was 720 or so), so that is the reason you can't qualify on your own and when you add your wife that solves one problem (DTI) but brings up another (FICO score).

The taxes/insurance are always shown as part of the payment on the GFE regardless if you are setting up an escrow account or not. 

[Phoenix-rising]

Shane, thanks for your reply.  

Just to clarify, I'm the wife and even with the high DTI on an app with just me, the LO provided the GFE above with an interest rate of 4.625% based on my 774 mid score.  On the joint app she quoted an interest rate of 4.825% on the GFE using DH's mid score of 705.  Our most recent FICO scores are in my signature.

We're in Louisiana and as far as I know insurance costs have risen due to recent hurricanes, but I don't think the housing market has declined like in other states.

I'm still not sure what happens if we dont make the 80% LTV on the appraisal.  At that point does it become "too bad, so sad" or do need to come up with the difference to make 80% LTV if we want the loan?

[ShanetheMortgageMan]

Ah, for some reason I thought you were in a different state.  Anyways Louisiana isn't a declining market, so MI providers are still issuing MI with a 680 score for now but DTI still needs to be within 55% typicaly, I'd ask the LO why can't you go above 80% to see if it's the MI or something else.

[Phoenix-rising]

I just found out why the LO kept talking about 80% LTV.  It's because DH told her we don't want to pay PMI.  She said that if we don't have 80% LTV we can still get the loan.  The only difference is that we'd have to pay PMI and we probably wouldn't be able to waive the escrows.  I'm fine with that even though I loathe the idea of paying into an escrow account.

She said that the rates she quoted are good for today only and that they change on a daily basis until we lock in the rate, but once we lock in the rate, it's good for 40 days.

I still want to see what Wells Fargo comes up with before we lock in a rate with FBT.

Is 4.625% a good rate for 774 FICO with 53% DTI?

Shane, if this scenario were you and your wife would you rather do the joint app and pay the higher interest (4.875%) or do the single app in her name only at the 4.625% rate?

[ShanetheMortgageMan]

The terms you are being offered are fine.  I'd go with the 4.625%, I don't need to be on the loan.