'Your papers, please' must never be heard in America
The calls are coming in. Calls from all of my refinance clients who patiently and politely have given Erin, my assistant, all the excessive paperwork needed to close their refinances. Of course, I get the calls:
Q. I live in the District and have been renting for the past 10 years. I have never owned a home, even though I easily could afford a mortgage and down payment with my salary and savings. I read one of your columns a few months ago that said the timing was right to purchase a home. Do you still recommend purchasing a home, or should I continue to wait?
One of the more unpleasant tasks of my job is to be the messenger when it comes to telling a homeowner that his property appraised for less than he expected during the refinance process. In many cases, a lower appraised value will result in a higher interest rate and sometimes will kill the deal.
In March 2009 I shared my personal story of discovering an incorrect identity on my credit report. While applying for an equity loan, I discovered Transunion, one of the three national credit reporting agencies, was reporting a different name under my Social Security number.
Last week, I described a letter I had received from a mortgage company soliciting a refinance. The letter was full of fancy calligraphy, color and exclamation points. At the bottom was a "Funding Voucher" designed to look like a check. Needless to say, my column suggested this form of solicitation was unethical.
Well, folks, they're back. I just received a mortgage refinance solicitation letter that made me want to throw up.
Mortgage rates remained astonishingly low this week, perpetuating the refinance boom that started several weeks ago. I've been in business for 18 years, and I have never seen rates as low as they are today.
The yield on the 10-year Treasury bill is 2.93 percent as of this writing. After poking around the Internet, it looks like that's the lowest yield since 1965. Because mortgage rates follow the movement of Treasury bonds, it's no surprise my telephone is ringing off the hook.
With interest rates remaining at historic lows, I want to reiterate my long-standing position that homeowners considering a refinance should seriously consider choosing a slightly higher interest rate to avoid the typically high cost of refinancing.
Q. We have a rental condominium in Washington that I'm hoping to sell in the next couple of years. It's probably worth $250,000 and has a $210,000, 30-year fixed-rate mortgage at 6.50 percent. I also have a 15-year fixed-rate $80,000 mortgage at 5.75 percent. I want to take advantage of today's rates and refinance both loans.
Federal Reserve Chairman Ben S. Bernanke met with the Board of Governors last week only to release more of the same news: Interest rates will remain low for "an extended period" because of the continuing sluggish economy.
Mortgage rates continue to surprise analysts by remaining at unprecedented low levels. It appears the economic woes in the U.S. pale in comparison to what's happening in some European countries.
I was sitting on my back porch with my wife enjoying the weather when we started talking about this column. She suggested that I write a column explaining common mortgage terms and what they mean for the consumer. She says a lot of folks don't have a clear understanding of many words used in the mortgage business.
Carry on with the refi, he says.
This report, he said, would have sufficed and I could have saved the $11.
