Can You Benefit From Refinancing?

Unless you've been on another planet the last few weeks, chances are you've heard the buzz about mortgage interest rates dipping to record lows recently. Finally, something to help us, the average American right? Maybe. Let me set the stage.

The good news is interest rates are very low right now. The bad news is qualifying for a mortgage has changed dramatically over the last two years. In order to qualify for the lowest rates available you need to meet all of the following criteria:

• Credit score of 740 or higher
• At least 20% equity
• Income documentation (NO "state income" loans anymore)
• To take cash out, you must have at least 30% equity

Clearly these requirements don't pertain to most people. It doesn't mean that refinancing doesn't make sense; it simply means that you need to take the interest rates being touted by the media with a grain of salt!

Are interest rates going to go lower? Should you wait to refinance?

One thing I know for sure is that if you try to "hit the bottom," you will miss it. We only know what the bottom was when we're looking back at it.

• The "chatter" several weeks ago was that interest rates were going to hit 4.5% on a 30-year fixed mortgage. That hasn't happened and there is no guarantee that it will.
• Let's get on the phone and discuss the specifics of your situation to determine what, if anything, can be done to improve your situation.
• Interest rates are very volatile right now. The wild swings you are seeing in the stock market are also happening in the bond market, which drives mortgage rates. The interest rate dips that we see usually last only hours, so if you are not ready you'll miss it.
  

If you think you want to refinance, but need a specific interest rate for it to make sense, you should gather your documentation and contact me to get your approval in motion so that if the interest rate you are targeting becomes available I can lock it in. In order for this to be possible, your loan will need to be approved so that I can lock it if your target is hit.

Unfortunately loans have gotten more expensive than before. It is virtually impossible to do a zero point loan today. All of the government intervention and regulation has taken its toll on the mortgage industry and it is only going to get worse.

The process of obtaining a loan has changed. You will certainly have a different experience than you've had in the past. As I mentioned earlier, qualifying for a mortgage today is much stricter these days so you will have to provide more documentation than you did before.

The value of your home will most likely be the wild card. While I can certainly get an estimate of the value prior to moving forward, until the actual appraisal is complete I won't know if I can complete the refinance. Unfortunately, you may have to pay for an appraisal and find out you cannot obtain a loan after all.

Most importantly, 70% of the people who used to be in the mortgage industry are gone. What that means is there is a big capacity problem right now - there aren't enough processors, underwriters, doc drawers, closers, etc... to handle the volume that has come in lately. Transactions that used to take 30 days are taking closer to 60 days.

I will do everything I can to make this a painless experience but I will need your help. We need to move forward quickly. Interest rates will not stay this low for very long. They are artificially low right now because the Fed is buying mortgage bonds, which it vows to do until June 2009. Once the Fed stops buying mortgage bonds interest rates will go up. Call me at (619)574-6545 so we can discuss your specific situation.