conflict between rate offered and monthly payments quoted

I have another bit of a confusing situation concerning the mortgage I am getting ready to refinance. The mortgage company offered me a note rate of 4.875% (with no points) on their Good Faith Estimate for a 15year Refinance; but then on their Truth-In-Lending Disclosure Statement they gave an annual percentage rate of 6.292% and payments of $431.36/month for 15 years on the $50,000.00 loan (all closing costs are included in this amount). I called and spoke to the person handling my account and told them that the 6.292% APR seemed to be way to high for a note rate of 4.875% ; and that the payments on a $50,000 loan at 4.875% for 15 years should have been closer to $392.15 a month. What do you think?

I also asked that I be given totals on the closing costs they used to arrive at those figures and they said that the closing costs estimated were $2,578.00. They told me several times that I was not being charged points, even though the Good Faith Estimated listed a Loan Discount of $4,845.00. They said the "loan discount" was what I would have to pay in interest if I were to pay the loan off before they had earned that much interest on the loan. I thought that a loan discount WAS points; but I could be wrong since I only know what I have read from consumer handouts. Are they trying to pull a fast one on me or is there something that I don't fully understand?

I want to tell them to just forget the whole thing and then start over with another mortgage company from scratch, but the rate they are offering me is the best one I have been offered yet. I'm just not sure whether or not I can trust them. I wish I had everything in writing but the estimates they have given me so far have not had totals on them, only amounts for each catagory. Can I request another Good Faith Estimate and another Truth-In-Lending Disclosure Statement with totals on the charges?

I dont know if this will help you or not, but I have a good faith estimate from my lender right here with me, I too was wondering what the "loan discount" meant...I decided to read a little bit further down, and it says "discount if borrow pays" meaning that the loan discount is a discount if the borrower pays closing costs.

I am just taking a stab here but, I would say in my situation that if the "seller" was going to pay for closing costs they would have to pay top dollar..but if the "borrower" (me in this case) were to pay closing costs then I would get the discount from the bank.

I hope someone can tell you if this is correct or not, but this is just what my thoughts are on the subject.

[HomeGuru]

Writer, you need to post on your initial thread rather than starting a brand new thread on the same subject matter.

This is a new subject. My other post was about the deed and this one is about the APR and monthly payment not coinciding with the note rate. I'm not sure how this thread is related to the previous thread. I'm new at this so I'm not completely sure, but I thought this was a different subject.

[HomeGuru]

[quote]Originally posted by refinancingdaze
[b]I have another bit of a confusing situation concerning the mortgage I am getting ready to refinance. The mortgage company offered me a note rate of 4.875% (with no points) on their Good Faith Estimate for a 15year Refinance; but then on their Truth-In-Lending Disclosure Statement they gave an annual percentage rate of 6.292% and payments of $431.36/month for 15 years on the $50,000.00 loan (all closing costs are included in this amount). I called and spoke to the person handling my account and told them that the 6.292% APR seemed to be way to high for a note rate of 4.875% ; and that the payments on a $50,000 loan at 4.875% for 15 years should have been closer to $392.15 a month. What do you think?


**A: you are being scammed and here is why. If the loan was really a no point loan, then the interest rate would be only a little lower than the APR. Here is another way to figure things out. Tell them that you are going to pay everything in cash ie. appraisal fee, closing costs etc. and then compare the APR with the note interest rate. The reasons that your APR is so high is because they are charging you points and trying to hide or disguise them by calling it something else. Points are commonly called origination fee, loan discount etc.
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I also asked that I be given totals on the closing costs they used to arrive at those figures and they said that the closing costs estimated were $2,578.00.

**A: then specifically ask for an itemized breakdown listing each line item charge ie. appraisal, title report, real property taxes, hazard insurance etc. The breakdown should be on the GFE.
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They told me several times that I was not being charged points, even though the Good Faith Estimated listed a Loan Discount of $4,845.00. They said the "loan discount" was what I would have to pay in interest if I were to pay the loan off before they had earned that much interest on the loan.

**A: wrong. That explanation title would be called a prepayment penalty clause and has absolutely nothing to do with loan discount points. By the way, is there a prepyament penalty on your loan and if so how much?
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I thought that a loan discount WAS points; but I could be wrong since I only know what I have read from consumer handouts. Are they trying to pull a fast one on me or is there something that I don't fully understand?

**A: they are pulling a fast one. From what I can gather, youa re being charged close to $5000 in points or close to 2 points.
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I want to tell them to just forget the whole thing and then start over with another mortgage company from scratch, but the rate they are offering me is the best one I have been offered yet. I'm just not sure whether or not I can trust them. I wish I had everything in writing but the estimates they have given me so far have not had totals on them, only amounts for each catagory. Can I request another Good Faith Estimate and another Truth-In-Lending Disclosure Statement with totals on the charges?

**A: yes and you can request anything you want and demand that they explain things in writing before you sign.

Thank you so much Home Guru. You don't know what a weight it is off my mind to get some solid information and to know that my fears were not unfounded. I E-mailed them yesterday asking them to answer questions concerning the rate, APR, and monthly payment. I am also going to call them right now to confirm that they got my E-mail and then I will give them until tomorrow to give me some clear answers. The other mortgage company, that I have been working with, is ready to close as soon as I give them the word and I told them I would know for sure by tomorrow. I just want to get this thing over with, but somehow I had the feeling that I was about to make a BIG mistake. The other company is offering me 5.25% with no points and that is looking better and better all the time, considering that they have been upfront with me about everything so far.

Thanks again.

[HomeGuru]

[quote]Originally posted by refinancingdaze
[b]Thank you so much Home Guru. You don't know what a weight it is off my mind to get some solid information and to know that my fears were not unfounded. I E-mailed them yesterday asking them to answer questions concerning the rate, APR, and monthly payment. I am also going to call them right now to confirm that they got my E-mail and then I will give them until tomorrow to give me some clear answers. The other mortgage company, that I have been working with, is ready to close as soon as I give them the word and I told them I would know for sure by tomorrow. I just want to get this thing over with, but somehow I had the feeling that I was about to make a BIG mistake. The other company is offering me 5.25% with no points and that is looking better and better all the time, considering that they have been upfront with me about everything so far.

Thanks again.

**A: make sure that you review the GFE very carefully and if you have any questions ask the mortgage lender to explain them so you have a complete understanding. Do not let them push you around or rush you.