Lender trying to charge more than previously discussed.

[Natalie Lindsey]

My husband and I are in the process of buying a duplex. The loan should be closing soon but I received another document to sign that is trying to charge us over $1000 more. It had already raised one time due to a higher appraisal cost so this is the third document we have received. We signed off on the other two but I don’t feel comfortable signing off on this one.

This document and the higher cost was never discussed with us, I just found it in my email. After looking at it to see where the additional charges came from I saw that it said origination changes (points). Normally paying points are to bring down the interest rate or mortgage payment. On the document, it still has the same interest rate we locked in a while back and the same mortgage amount. The APR was higher though. So basically they are asking us to pay over $1000 more now that we are close to closing but with no benefit to us. It would only cost us more over the life of the loan.

Has anyone else had this happen? I don’t want to pay extra money for something that was never discussed and doesn’t benefit us in anyway. How should I handle this?

[Daniel Hennek]

Natalie,

There are only so many things that can happen to adjust the "origination charges".

Origination charges are tied to your interest rate.  They are inextricably linked.  They can only change with a VALID "changed circumstance".  The lender is supposed to be able to give you a good estimate up front and can only change things when there is a good reason that they could NOT have anticipated.

Your loan officer should be able to explain to you what happened and why.  They should have a good reason.  Did you have to extend your lock?  Did you select a lower rate?  Did you NOT lock your rate at initial application?  And then lock it after rates increased a little bit?  

The appraisal being underestimated isn't that big of a deal.  It happens; your lender should estimate the highest amount they normally see but it can't be that much different when looked at along with the big picture of purchasing a home.  What was it $150-$200 higher?  Who cares?  Your lender doesn't control what the appraiser charges, they just underestimated.  What is a big deal is that you don't understand what happened to add $1,000 origination.  That amount is controlled by the lender and you should ask about it.

Grab your initial Loan Estimate.  See if you're locked in, verify the rate is the same as your new estimate.  Check the lock expiration date.  Are you past it?  Were you not locked at initial estimate?  When did you lock?  If you weren't locked in then locking is a valid changed circumstance.  However, the concept of locking and the implications tied to it should have been explained to you.

Call your Mortgage Loan Originator and ask them why it changed.  Simple.