Once again, record low interest rates are increasing the demand for home refinancing. A friend in the mortgage business told me the other day that up until just a few weeks ago, his business was pretty much non-existent. Today, that picture has changed rather drastically as he finds himself trying to keep up with the highest demands in more than five years.
With 15 year fixed rates on a refinance averaging 4.63% this past week, down from 4.67%, and 1-year adjustable loans at 5.89%, down slightly from the previous week, it’s no wonder that he has been keeping himself busy.
According to a report released by Reuters, the Mortgage Bankers Association said that its seasonally adjusted index of mortgage applications, including both refinance and purchase loans, increased almost 16%, the highest increase since July, 2003. But don’t get your hopes up too high, it’s still very difficult to take advantage of those great rates.
Full documentation is going to be essential, two years of tax returns, income to support the loan, equity in the property if you are planning a refinance, your first born, 20 percent or more down, and two years of self-employment history if you own your own business. Okay, I threw in that first born qualification, but you get my point.
Because I own several properties, I would welcome the opportunity to take advantage of better rates. I could literally save thousands of dollars. On second home and investment properties, however, don’t expect to find those great advertised rates. The going is still good however, which is what prompted the call to my lender friend in the first place.
So while I own my own business, my real estate income has fallen dramatically over the last year. So too has the value in my primary residence and investment properties. So what do I do to try and cut my monthly burn rate? We are already down to one car in the family and we’ve essentially cut all non-essentials…like the gym membership and vacation trips for the kids to see grandma. So what if my New Year’s resolution won’t be realized this year, or my mom will have to get on a plane to see her grandkids, it’s all about surviving the storm, right?
My lender friend made another suggestion. Though he couldn’t do much for me in the loan department, he told me that many banks are not so keen on losing business to other competing banks due to a lower interest rate. With that information, my next call was to Countrywide Home Mortgage.
I made up a story and explained to them that I was in the process of refinancing all my loans, most of which were with Countrywide. I explained that unfortunately for Countrywide, I was refinancing with a competing bank…I even had one in mind in case they asked, which they didn’t. I told them that I really did not want to change lenders, but the rates promised by the competing bank were significantly lower than what I was currently paying. Outside of refinancing, I asked what Countrywide could do to lower my rates insisting that I would stick with them if they could simply adjust my rate down a little bit…like a credit card company may consider.
Surprisingly, they transferred my to the ‘loan modification’ department, where I began my story all over again in an effort to cut my rates without the requisite paperwork that typically follows such a request. Starting with my current home loan, the woman I was speaking with looked up each and every loan in an effort to see what program could be done to help offset my current loan payments.
What I was not aware of was in all cases, my loans were actually owned by other banks. Countrywide was simply the processor of each loan, sold sometime in the past to other banks as is typical in the lending business.
So did this mean that Countrywide was not able to adjust my loans? Pretty much! Was there anything I could do to lower the payments? According to Countrywide, I would need to be at least three months in arrears to even be considered for programs that are currently being offered. To clarify things, I explained that I wasn’t looking for federal or state assistance to help make my payments, I was simply calling to see if they would be willing to lower my rate a little, simply based off a telephone call and my good nature. The person I was speaking with laughed at that comment.
In the end, I knew what I was up against. At that moment, though, I just wanted to be back in the days where a telephone call and a stated income would get me the rate I was looking for. Yeah, it pains me to know that I could be saving a significant amount of money in a time where I could really use that money elsewhere. In these scary times, I would like to save as much as possible…but it is anyone’s guess what may be around the corner. If nothing else, at least I still have a sense of humor…at least according to the Countrywide rep that I was speaking with earlier in the week.