Today's Best Mortgage Rates Denied to Many
The Wall Street Journal reported July 10, 2010 on a relatively recent phenomenon that is affecting increasing numbers of home owners applying for refinancing deals. Lenders have developed such rigid checklists around their lending criteria that they're frequently refusing to refinance the mortgages of people with pristine credit records.
The Journal quoted the case of an Arizona man whose financial circumstances were first class. He'd never made a late payment or bounced a check so his credit score was near-perfect. And he had healthy savings, plenty of equity in his home, and a solid pension in place. But he'd sustained a loss on an investment he'd made in a small business. And, even though that in no way undermined his comfortable position, it was enough to stymie his application to refinance.
Why the Refinancing Problem?
One of the reasons why some lenders are developing these over-rigid criteria is what happens when a mortgage goes into default. Often, Freddie Mac or Fannie Mae investors own the loan, and they attempt either to rescue it or to foreclose. However, if they find an underwriting error, they can make the original lender buy it back and take the hit. Soaring default rates have transformed this situation from a minor irritation into a major issue.
Of course, many refinancing applications still sail through, and it's only borrowers who can't tick all the boxes in lending criteria who are likely to be refused.
Je Ne Regrette Rien
The results of a new survey were published July 12, 2010, and it turns out that--even amid all the current economic gloom--only nine percent of home owners regret having bought their properties. The study, conducted last month by Princeton Survey Research Associates, also found that the wealthier people were, the more likely they were to prefer fixed-rate mortgages (FRMs). About 85 percent of those earning more than $75,000 a year had FRMs.
One reason that such a surprisingly high number of home owners are happy with their real estate purchases could be that house prices--contrary to popular perception--are edging up again.
Another new survey--this time the CoreLogic® House Price Index and published July 13, 2010--found that, nationally, home prices went up by 2.9 percent in May 2010 compared to May 2009, and by 3.5 percent in April 2010 compared to April 2009. Those figures include distressed sales.
You may well think that now--a time of record lowest mortgage rates--is the perfect opportunity to refinance. If so, find competitive mortgage quotes here.