Procrastination is ever so common with borrowers when it comes to their mortgage refinance. Not only can the delay itself be dooming for the borrower, some lenders are taking 60 days or longer to complete the transaction. The delay by the borrower combined with the long lender turnaround time means the interest rate might vanish before the homeowner can close.
Take a borrower who was looking to refinance on June 1. The borrower knew it made all the sense in the world to refinance, but would not put the pedal to the medal to get it done. Finally, on July 1, he decides to get the paperwork going. He decides to do his business directly with Chase. Sadly, being a big bank bogged down with loan modifications, foreclosures, refinances, etc., Chase is taking up to 60 days or more to close a simple refinance loan.
Read this quote from Rismedia: “The upshot is that refinancing deals that used to take no more than a month now can take two or three, depending on the lender. The largest lenders-such as Bank of America and J.P. Morgan Chase & Co.-have been among the slowest, brokers say. That means borrowers are continuing to pay at the higher rate for months more than they thought they would have to, and while they wait, some are even losing their “locked in” rates as the 30- and 45-day guarantees expire.” Read more: http://rismedia.com/2009-08-10/is-the-pipeline-clogged-for-refinancing-homeowners/#ixzz0O4KDtaRD
Meanwhile, the market and the economy moves on. Home values are declining, layoffs are still common, new appraisal requirements add another burden, and interest rates are not stable. Easily, what a borrower was qualified to do and what was available on June 1 might be very different on October 1. Also, lenders can change their guidelines and programs at any time – right in the middle of your transaction.
We all can see some benefit in waiting to buy that big screen TV. In all likelihood, it will be a few dollars cheaper in 2 months. Not so with a mortgage loan. The cost of a mortgage could be many thousands more in just 30 days – if it’s still available at all.
The moral of the story is that if you have the opportunity to refinance now, you should move on it. We may be in for some surprises in the market for the rest of 2009.
By the way, our office is NOT burdened with loan modifications, foreclosures, etc. So our focus is totally on originating new mortgage loans. We can close Fannie Mae loans in 2 weeks or less provided we have a complete file. FHA files can take a bit longer due to outside requirements by FHA/HUD. And don’t forget to ask about our very popular rate lock and drop program
To stay completely up-to-date on all the pending mortgage changes, to see how they will affect you, and get news about interest rates and programs, just read my weekly updates - Click for free email alerts.