Take Advantage of Low Interest Rates Without Getting Caught in the Weeds

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Take Advantage of Low Interest Rates Without Getting Caught in the Weeds

January 9th, 2008 categories: Real Estate Finance

Happy New Year! We kick off the first full week of the New Year, only to see interest rates drop to the lowest levels in weeks. There is new vigor in the market place. Phones are ringing, people are busy and many buyers feel that now is the time to buy.

Many are predicting real estate to finally settle at the “bottom” point in 2008. With interest rates this low, people who have been waiting on the sidelines for the “right time to buy” are now getting into the market.

Investors are taking advantage of the low rates to purchase properties from distressed sellers. Rents are high, giving investors a wonderful opportunity to negotiate low purchase prices, take advantage of favorable interest rates, and find good tenants.

Many people are refinancing their current adjustable rate mortgages into low fixed rate mortgages. The majority of these people were initially contacted by their current lender who offered very attractive interest rates and low closing costs.

The person who contacted them on the phone makes the process sound simple. Typically, he/she requests some financial documentation, and quotes low rates and closing costs. Unfortunately, borrowers who readily provide the requested information often find themselves waiting and waiting for the promised loan documents to arrive. Only…they may wait and wait.

Many borrowers who call back, find that the person they had been dealing with no longer works for the lender, or has passed their file on to someone else in another department who is really the decision maker. It is at this point that they often find out that they did not qualify for the promised low rate after all.

Many are given “counter offers” with different interest rates and terms than they were initially quoted.

Banks lend money to make money. With the current credit crunch, it seems there is a growing trend among the larger banks to use lower paid, “data gatherers” to solicit refinances. While often friendly and well intentioned, the majority of these employees have little knowledge of lending guidelines and qualifications. Their duties are to collect your information and pass it along to someone else who has the training and authority to either approve or decline your application.

The theory makes sense economically for the lenders, but the problem is that many consumers get caught in the weeds. It can take 5 or 6 weeks only to find out that they will not be given the interest rates they were initially quoted. They find it is difficult to contact the person in the bank and even harder to get a return phone call.

Lately, these complaints have been increasing in regularity and while it is frustrating and unfair to consumers, it highlights why a mortgage broker is necessary to navigate the current lending environment. The more the banks “centralize” their process, the worse it is for consumers and the more valuable the services of a knowledgeable mortgage broker become.

Banks do not have the overwhelming volume they had three years ago. A typical refinance should be completed in 3 to 4 weeks. You should have your underwriting approval in 7 to 10 days and your loan documents in two to three weeks. It should not take 5 weeks to find out that you do not qualify.

A true mortgage professional is your advocate. Not only will they offer you technical knowledge and expertise, they will make the process work for you not the other way around. A good mortgage broker will explain the process, move your application through the system timely and shop several lenders to qualify you quickly at the lowest available rates.

If you are looking to purchase or refinance a home and have questions, please call or e-mail me at anytime. I am happy to offer you solutions.

Lysa Catlin
CMC Finance, Inc.
(858) 456-3000

This entry was posted on Wednesday, January 9th, 2008 at 4:44 pm and is filed under Real Estate Finance. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.