Finance rate changed bc property is condo instead of townhouse

Hello everyone,
I'm wondering if this is a common practice. Re-finance rate jumped from 4.375% to 4.875% on the day before closing. I'm steaming right now. I feel like I've been a victim of a bait-and-switch tactic.

Here is the situation. I've been working with x company to refinance my townhouse for over a month now. my current rate is 5.25% 30 yr and the new rate is suppose to be 4.375 no cost. I have excellent credit (800s) and my LTV is below 80%, all documents, income, etc.. verified. Appraisal completed and HOA questionnaire completed (together cost around $700 out of pocket already) + new content insurance coverage is required so I also purchase a year of that as well (around $200).

Everything is set for closing and then today I received an email from the loan officer that my rate have changed from 4.375% to 4.875% because they JUST realized that my townhouse is under a condo policy (we have a master policy for the building structure which is common) and they knew this property is under a master policy from the beginning. I'm upset that after spending close to 1k, they are just now telling this. Has this happened to anyone? Last time I check, A condo: you own only the interiors while a town house you own the land as well as the interiors plus any yard or deck (which is what I have).

Any advice or suggestions is greatly appreciated.

Thanks

its a refi, right?

You can either refuse to close unless they honor the rate (some loan reps will make adjustments bc their commission is on the line) or you can sign the refi then IMMEDIATELY rescind. You have 3 days to do so, read the right of recission docs carefully in your closing papers.... and if you rescind youll get all your costs back.

You may not get what youve spent so far if you just walk without signing then rescinding.

You should NAME the company after all this is over so others dont use them

I will give them a chance to correct this. If they decide to take advantage of the situation, I will file a BBB complain (if that does anything) and disclose the company so others don't use them. I've refinanced many times, and never heard of increasing the rate just because the property has a master policy (which they knew from the start). I thought the rate is mostly based on your LTV and credit score... and once it's locked (for over a month now), you can't change it (provided that you qualify for the loan, which I do).

SUCKISSTAPLES said:

its a refi, right?

You can either refuse to close unless they honor the rate (some loan reps will make adjustments bc their commission is on the line) or you can sign the refi then IMMEDIATELY rescind. You have 3 days to do so, read the right of recission docs carefully in your closing papers.... and if you rescind youll get all your costs back.

You may not get what youve spent so far if you just walk without signing then rescinding.

You should NAME the company after all this is over so others dont use them

Hi, Contrary to popular belief we Brokers are not all crooks! There is a difference between what banks pay for Single family DETACHED, single family ATTACHED, and Condos. I'm on one of my bank pricing calculators now and with the only difference in the loan scenario being from a single family attached to a Condo the pricing increases by .1375%. So if they are hitting you for .500% that is a large jump. I'm in MA and you can rescind after the closing and get all your costs back including the appriasal, credit fee, etc. So if they won't compromise then you have a good option. Hope this helps! Thanks, Pat

Hi all, thanks for all the responses. I was able to talk with the broker again and we managed to work out something that is competitive with the current rates. My original contract was better when they quoted me as a townhome but i'm only slighly more at closing to get that rate. I decided to take the offer and we closed today. What PatTovey said makes sense that lenders do charge slight more (but no .5 point more) for properties that are considered as a "Condo" even if it's physically a townhouse (multi-floors, own the land, no condo fee, etc..). It's unfortunate that builders chose to recorded it as a condo to cut cost and the home owner end up taking the hit later.
I'm happy with my refinance and my monthly saving is around $300 compared to my previous payment (5.25%, now @ 4.375 30yr/fix). Thanks everyone.

PatTovey said: Hi, Contrary to popular belief we Brokers are not all crooks! There is a difference between what banks pay for Single family DETACHED, single family ATTACHED, and Condos. I'm on one of my bank pricing calculators now and with the only difference in the loan scenario being from a single family attached to a Condo the pricing increases by .1375%. So if they are hitting you for .500% that is a large jump. I'm in MA and you can rescind after the closing and get all your costs back including the appriasal, credit fee, etc. So if they won't compromise then you have a good option. Hope this helps! Thanks, Pat

He has bigger things to worry about, such as roomate's gf

I recently refinanced my condo and two brokers quoted me a higher price because it was a condo, but my local credit union gave me their advertised rate without question (which was also better). When I went to closing the title agent told me that because of the recent financial overhauls, that the fees at closing could not be more than 10% above your GFE and any changes to the contract had to be completed at least 48hours before scheduled closing (I had to sign that I received and accepted an updated appraisal).
I'm not sure if your lender was allowed to make changes to your contract that close to closing, looks like a money grab.