Can I cancel a refi that has loan docs submitted to escrow?

Unless you've been in a cave, you must have heard that getting a re-fi is extremely difficult now - I'm surprised you were approved at all. The fact that you're still waiting after 5 months for this thing to close should tell you that much. The reason your appraisal came in under market is because the values are still dropping in your area and they are accounting for that -they'd be foolish to loan you money based on today's value when the trend is still going downward. I'm willing to bet an appraisal was done 5 months ago & they did another comparable recently to see what how the value has held up. It's perfectly legal for them to do this - they're covering their a&& - something they didn't do 4-5 years ago which is now coming back to bite them. You will probably be able to cancel it, but you'd be liable for appraisal fees at the very least...possibly more. If you can't afford to pay the property tax without refinancing your house, then you've already got a huge red flag in your file. You might want to consider having an impound account on your refi'd loan, that way you don't have to worry about taxes or insurance again.