Refinance with Provident Funding

Mortgage:
Provident Funding
Price:
Low rate

Reviewed by:
Rating:
4
On October 9, 2012
Last modified:October 9, 2012

Summary:

Provident Funding may have a better mortgage refinance rate, but the requirements for a loan are also quite high. It exercises very strict review of loan applications. The process usually requires the applicant submit proof of employment, income, and liability, as well as tax records. And for bank accounts used in the closing, every deposit greater than $2,000 will be asked to provide source.

We bought our current house in April 2010 and since then, we had refinanced our mortgage three times already, bringing the interest rate of our 15-year fixed mortgage from 4.25% of the original loan all the way down to 2.875% when we refied the last time in May (you probably can get a better deal now that the mortgage rates are at new lows after QE3, with the rate of 15-year fixed as low as 2.75%). All these refis we had done in the past two and a half years save us hundreds of dollars a month in interest payments, so it was quite worth the effort, even though every time we had to go through the seemingly tedious process of providing all the documents to prove that we are worthy borrowers who have the ability to make monthly payments. Another reason that we could refinance our loan again and again in such a short time period was that they were all no-cost refinance. We didn’t pay a penny out of our pocket, even the appraisal fees and credit check fees were reimbursed to us. If we had to pay thousands of dollars in closing cost every time, then we definitely would not have bothered.

Speaking about the tedious process of refi, the funny thing for us is that all our four loans, including the original one, were obtained through the same mortgage broker from the same bank, Provident Funding of California. And yet, every time we did it, we were asked to provide some documents that we never thought would be necessary or were not asked to submit before, in addition to those usual stuff such as tax returns, pay stubs, and bank statements. You would think that since I have dealt with them so many times and have provided all the required documents, the whole process would be simpler. But that was not the case with Provident Funding, which seems to follow very strict guidelines in the review process. For example, during the latest refinancing process, I was asked to provide a written statement for one item in my credit report. It was an inquiry from Chase early this year when I got a new credit card. I don’t know why I had to state explicitly that the inquiry was nothing more than a new credit card I acquired. Can’t they tell from the credit report what that was about? And, not just that. They asked my wife to sign a statement that the checking account I listed in the application was jointly owned by us, despite that only my name was in the application. They also asked me to provide every single 1099 form of my business for the past two years, even though the tax returns clearly showed my total business income. Besides, we also had to prove that every deposit into the checking account that was more than $2,000 had a clean source if it wasn’t a direct deposit from employers.

I am not complaining about the strict scrutiny Provident Funding exercised during the review, given what happened in the mortgage industry. What frustrated me the most was every time, there were new supporting documents we had to submit in order to get the loan approved, even for us as existing customer who has never late in making monthly payments. For our last refi in May, just days before closing, I was told that I couldn’t use my checking account for the closing because there were so many transactions in the account in a month. I didn’t know why that was a concern even after there were clear traces for all the transactions. In order to close the deal, I had to use a “clean” account instead. Eventually, I used a savings account and had to wire the money to avoid any delay. When all were done, I was again warmed to not make large transactions in that account even in the first two weeks after the closing. Seriously.

The reason that we kept going back to our mortgage broker to refi with Provident Funding is the rates we got so far were very competitive, and saving money was more important than having an easy process (not that we had anything to worry about). So if you are considering using Provident Funding for your mortgage or refinance, be prepared to answer many requests and provide lots of documents.

It really took quite some effort to save money :)

Provident Funding may have a better mortgage refinance rate, but the requirements for a loan are also quite high. It exercises very strict review of loan applications. The process usually requires the applicant submit proof of employment, income, and liability, as well as tax records. And for bank accounts used in the closing, every deposit greater than $2,000 will be asked to provide source.

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One Response to “Refinance with Provident Funding”

  1. AverageJoe |  Oct 09, 2012 at 12:32 pm

    The annoying level of paperwork doesn’t surprise me. I have a friend in banking who says that it’s incredible…their mortgage people are always asked at the last minute now for more and more verification…something that makes the whole process horrible for both them and the customer.

    What does surprise me is the checking issue. What difference does it make which account you write the check from? That one is plain weird.