So You Think You Want to Refinance?

There are some interesting things happening in the mortgage industry that we've never seen all at the same time. Yes, the industry is very cyclical. As our country's economy moves in and out of bull or bear markets, Real Estate tends to do the same.

Typically, our markets see at least one recession every 10 years. This is by far the deepest and hardest we've seen in over 50 years. Some economists believe we are near bottom, while others do not share their optomism. Either way, an interesting thing has occurred during this down time.

In the midst of all the turmoil, the mortgage industry has all but imploded. In an effort to salvage the industry and our banking system, the government made huge efforts last fall and this Spring to make some changes to spur lending between banks. They then authorized the Treasury to purchase Mortgage Backed Securities to push mortgage rates to historic low prices.

As mortgage rates fall to 4.5 and 5% over the last several months, Americans have come out of the woodwork to refinance their homes. Also, we are starting to see improvements in the resale of homes. All these things are good things, you might think. There is a problem though.

Banks and Lenders very quickly downsized over the last 2 years to shave overhead and avoid closing up shop all together. Thousands of jobs were lost. Thousands of banks were lost.

In previous Refinance markets, the business was absolutely unheard of. However, the number of lenders out there was growing, not shrinking. Lenders and Banks were expanding and hiring to meet the growing demands of the public.

Today, Banks and Lenders are fewer. The amount of business coming in is very difficult to manage. Processors, underwriters, compliance teams, & loan officers are all working 10+ hours per day and even on weekends to keep up with the volume of business. The business is spread across a smaller number of qualified servicers who do not have the full capacity to handle it.

What does that mean? It means refinance business is taking 8, 12, and sometimes more weeks to complete. These refinances are coming in so fast, they are being placed in que to be worked up.

As consumers, it is important to understand that the speed of service is challenging for all of the banks right now. Many banks are even charging non-refundable $500 application fees before they even start the process. If the loan doesn't close or if it's not even approved the consumer is out the application fee.

Most cities in America are dealing with declining home values causing appraisals to come in short on so many refinance transactions. This causes problems. Across the board we're seeing lenders and banks calling for Appraisal Reviews. Essentially, a second appraiser is hired to offer his value as well as the first. These reviews are costing more money and more time only making the processing time that much slower.

If you're looking at refinancing in these times, Be sure you are prepared for a long wait. It may seem frustrating to you as a consumer. Trust me, there is a lot of frustration in the loan plants these days. I don't know anyone who doesn't want to close loans and make some money. I also know so many highly qualified and professional loan officers who are desperately trying to provide outstanding service to their clients.

If you or someone you know is going to refinance your home, please be patient with the process. The system is in turmoil right now. We're all working very hard to drive the car with two flat tires at 60 miles an hour.

Hang in there! We'll all get through this together. Here at Legacy Mortgage, we are closing loans like we've never done. Our numbers are shattering records every month. It is all good news.

We are not collecting an application fee upfront, but we are collecting for appraisals up front to cover that cost. If you're in the market, we are still closing refinances in approximately 60 days. If you're looking at buying, we are still closing loans in 30-45 days.

Call and we'll be happy to work with you on your financing needs. Have a great day!

Joshua Christensen 505-938-5940