Posts Tagged Loan
The chart above tracks interest rates over the past 200 years. We are experiencing interest rates nearly as low as anytime over that period of time. Our challenge is making those rates available for the average home purchaser. We continue to see underwriting guidelines that penalize the home buyer with relatively solid credit, good income, and sufficient cash for a down payment. Lenders obviously got burned during the recession but they are turning away good business. It makes no sense. I don’t see the housing market making a strong recovery until lenders change their lending practices.
In the meantime, those buyers who can qualify for a mortgage will get an incredible deal. Kim and I are considering refinancing again after refinancing just last year. I’m a firm believer in the quote “It’s not the price but the terms” and the terms are pretty good at the moment.
Thanks to Devon DeCrausaz, Branch Manager & Vice President at MegaStar Financial Corp for use of the chart. MegaStar is one of the few lenders with common sense lending practices.
I was somewhat shocked when a few months ago Wells Fargo (they hold our 1st mortgage) called and asked if I wanted to refinance at a rate about 1% below where I was at. They said the closing costs were minimal and an appraisal wasn’t needed. I just needed to confirm that our employment situation hadn’t changed for Kim and I. I asked what was the catch? It seemed rather strange for a bank to call me and ask if I wanted to lower my interest rate on my mortgage so they would make less money.
I started thinking about it and realized they were concerned about losing my business. I had been considering refinancing with another lender. It probably helped that we had high credit scores and no missed payments.
So we signed our name a few times and sat back while Wells Fargo did their thing. After about 6 weeks, they said the docs were ready and we could close.
We went to the title company yesterday and lowered our monthly payments by over $400! Yeeeee Hawwww! Our closing costs were so low we can pay those off in about 4 months.
It is a strange world to say the least. People wanting new loans struggle to qualify in this lending environment but then lenders are turning around and giving away money at lower interest rates. There is something seriously wrong with this picture. I think I know the answer but I don’t want to get political, only celebrate that we were on the right side of this transaction.