Here at America’s Mortgage Choice, we pride ourselves on being customer centric. Understand your options, make good choices and get a great rate. These are the things we want to deliver to every customer. It has helped keep us very busy over the last several months as rates have gotten down to 5% and we have been glad to be that busy.
However several things have gotten us to the point where we think that the end of the refinance wave is at hand. First, rates seem to have bottomed out. There may be a new wave that starts IF and when they fall to 4.25% or lower. I think it’s very, very unlikely that will be the case and rates are as low as they will be. Second is that foreclosures are through the roof and killing refinancing opportunity in the process. In fact is has been said that for every one property that banks have dumped on the market as a foreclosure, there are another two in inventory coming to market. This will further depress prices and values in the very near future.
This is critical because lenders are demanding that opinions of value, otherwise known as appraisals, be “backed up” with facts. By facts they mean actual closings. Just this morning a loan was rejected with 790 credit scores, great debt to income ratio and a borrower with savings of over one year’s income in the bank. Why, you might ask? It was because they lived in a great neighborhood that is minimally impacted by the foreclosure crisis. No homes have been sold in the area over the last 9 months. In fact, things are fine in the area. The zip code has 2 foreclosures in the last year and thus, people are staying put. No financial distress means no distressed sales. But the bank needs “current evidence” of market value and rejected the loan. Literally rejected the loan because the neighborhood has stable schools and is the type of place where most people put 20% down and get fixed rate loans. The area is too good at avoiding the foreclosure crisis so is now being punished by not being able to refinance.
The bottom line is it is getting harder to refinance, not easier. If you have not done so, do it now. By month end, AMC and many other lenders will have turned attention to home buyers not refinancers. The fact is buyers are now easier to approve, since they are buying foreclosures, and rates will not be spurring refi demand. It’s time to act, or not act. Either is OK, but it is time to choose!
