Adventures in Closing

I am not fond of surprises, and especially not when I am feeling stressed. I doubt that anyone is particularly crazy about surprises under those circumstances. So I was very unhappy at 4:00 p.m. on Tuesday afternoon.

That's when we closed on our new house. Before I get into the rant, we got the loan and we closed on the house, don't worry. I signed eighty zillion papers with the wrong hand, and it only took me an hour and a half.

I really hate last minute things, so I was already on edge about the loan. They figured out at 4:30 p.m. on Monday how much we needed to bring to the closing. It seemed like a lot, and it cleaned us out of all but $600 in that savings account. (Don't worry: we have more money at other banks, and I'm getting paid tomorrow.)

What I hadn't realized was that the interest rate for the loan was higher than I expected. On our preapproval letter, it said we were preapproved for a loan up to thus-and-such amount at a rate of x%, and that the preapproval was good for ninety days. It said the next step was to get a property description turned in to them, and to prove that we had assets totaling y dollars as we had claimed. Maybe this is a difference between states, but I clearly remember our preapproval letter in Illinois being very specific that the interest rate was subject to change until we locked it. This letter said nothing about interest rates changing. I figured it was a special credit union thing that we could have that rate for ninety days. And the loan officer may have said something about variable interest rates, but if he did, it went in one ear and out the other. At the end of the day, what I was left with was this preapproval letter that misleadingly implied that the interest rate was x%.

Of course I know that interest rates do fluctuate. I've gotten a mortgage before. I should have kept track of that and asked explicitly every step of the way what the rate was. I went and talked to the loan officer a half dozen times about one thing or another. On my last visit with him I even asked specifically for an escrow account. I am not stupid or inexperienced with this process. But he never brought it up and I never thought to bring it up, either.

Back to Tuesday at 4 p.m. I get the paperwork and discover that the interest rate is 0.75% more than I expected. That may not sound like much, but over the lifetime of the loan, this puts me out $20,000, and raises my monthly payments by more than $50.

I am furious. I call the mortgage loan officer and express my extreme displeasure. I tell him that the preapproval letter made no mention of rate changes, and even if he did tell me in person, it doesn't say anything on this letter about that. The letter is misleading and I feel like I have been baited and switched. And I am angry that I didn't find out about this until the closing, when I have no choice but to agree to the terms of the loan or lose my house. I certainly raised my voice, but I didn't scream at him, and I talked only about how I felt. I didn't call him any bad names, and, to his credit, he was very courteous to me and let me say my piece, only answering with "Yes, ma'am." After I got off the phone I was shaking and I wanted to cry. I had to calm down before I could begin signing the papers.

After the closing, we showed our realtor the preapproval letter and he said it was definitely misleading. He agreed to go with me to the credit union to see the loan officer in the morning. So on Wednesday morning he and I went to see the loan officer. The first thing I did was to apologize for yelling at him, and he told me no apology was necessary, because he felt really bad about the situation. So we wanted to see what we could do about this mess. I think what we're going to do is refinance the loan right away with a lower rate 5-year fixed ARM loan. They are going to waive some of the fees for that because of this misunderstanding.

I told him that he could tell me whatever he wanted when I was in there getting a preapproval, but at the end of the day when his words have gone in one ear and out the other, what I'm left with is this letter, and the letter says absolutely nothing about the interest rate, and gives you the impression that you're locked into that rate. I said all they needed was just a little asterisk next to the rate with a footnote indicating that the rate will vary until you lock it in, and then the letter would be fine.

He said we were not the first people who had been misled by their letter, and he said he was going to bring it up at the next staff meeting of the mortgage loan department, and get that letter changed. I told him that I'd be happy to help him in any way I could, if it would prevent the next poor sap from getting burned.

The loan officer brought this up himself, that we are their dream customers: reliable people with a steady income, and he felt terrible that we were unhappy. (Especially because we will probably buy two cars and another property within the next five years or so, with loans that we would want to obtain from the credit union!) I think that under the circumstances, we have reached an acceptable solution, so I will probably go to them again for my next loan. I'll just be a lot more cautious and question everything.