Do I still need to make a payment if I am closing on a refinance within days?
Criddle asked:
I am getting ready to close on my refinance. I called my current lender to make a payement and they advised me not to make a payment this close to closing because it will just be returned back to me because the amount is included in my payoff. How accurate is this? Will I now have to pay that at my closing?
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I am getting ready to close on my refinance. I called my current lender to make a payement and they advised me not to make a payment this close to closing because it will just be returned back to me because the amount is included in my payoff. How accurate is this? Will I now have to pay that at my closing?
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February 27th, 2009 at 12:24 pm
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Make the payment.
I make my living closing purchases, sales, and refinances. Especially recently, a lot of them fall through at the last minute. You don’t know you’re going to close until you close, and with a refinance, you don’t know until three days after you’ve closed.
What will happen if you make the payment is this: The settlement agent will have already gotten a payoff based on you NOT making the payment, so they will send the old lender too much money, and they will refund you the difference in a few weeks.
However, if you don’t make the payment, and you close, and the settlement agent sends in the payment, and you just happen to go over the grace period and get late charges, you’ll be called upon to make up the difference, and it will delay getting the old mortgage released, and the new lender won’t be happy with you or the settlement agent. It’s a lot of hassle caused by not making the payment.
Even worse, if you don’t make the payment and don’t close, you just earned yourself a hit on your credit report, which may interfere with closing two weeks from now.
Make the payment. Play it safe.
March 2nd, 2009 at 7:58 pm
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This is a bank talking. Personally, I would send in the payment and let them send it back to me. The just in case factor is working here.
March 3rd, 2009 at 1:44 pm
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Make the payment! Not sure who the office troll was who told you that but when it comes to the payoff they will take into account ever days worth of interest up until the moment of the closing.
If you don’t make the payment you risk a hit on your credit report for a late payment. That usually goes in automatically — the lender’s computer tells the credit bureau’s computer that you were late or missed a payment — no human is ever involved. Then when you protest the hit a human will look at the records and say, “Yes, they missed a payment.” and the hit will stick.
It’s true that you’ll get most of that payment back a few days after closing but let the system work the way that it was designed, it’s much safer that way.
March 4th, 2009 at 10:27 am
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If you indeed did speak with your current lender and they told you no problem then you are fine-I personally just refi’d my personal residence and the same thing happened. It’s kind of nice to have a tiny break isn’t it! After what might have seemed like a chore for awhile to have that break is a blessing and probably you needed it. So stop worrying and enjoy it!
March 5th, 2009 at 12:06 pm
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Well you should call the lender and ask them.
March 7th, 2009 at 4:04 pm
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Since most payments are due by the 15th or you’re charged a late fee, make the payment. If the payoff ends up being too high, then your current lender will send you back the difference. Plus, the lender you’re working with can just update the payoff…it’s pretty simple to do!
March 9th, 2009 at 6:16 pm
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Pay the bill and the old lender will send it back to you depending on whether they were able to close on the loan.
You never know, some of these things gets messed up - there are too many moving parts in the home closing process. A simple clerical mistake from the people involved can move your closing date - and you certainly do not want this to affect your credit.