Latest Articles

2009-01-22 00:12:23

RE-FI Binge Creates Logjam For Purchase Loans


The Mortgage Bankers Association recently reported that mortgage applications were at the highest levels in more than five years. Interest rates for 30-year benchmark fixed-rate loans dropped below 5 percent interest for the first time in half a century, spurring 80 percent of applicants to refinance their mortgages.

That’s good because fewer homes will hit the sales market, but it’s bad because a surge of re-fis is clogging the pipeline.
 
The reason? David Reed, of CD Reed Mortgage Bankers, www.cdreed.com, says, “If you’ve got a contract, prepare for a possible extension.”
 
Why? Simple supply and demand. “The obvious reason is that rates are at record lows and lots of folks are refinancing their ‘stratospheric’ 6.00 percent interest rate,” says Reed. But there’s a difference with this logjam, he points out. Fewer lenders, loan officers, mortgage brokers and underwriters.

“Remember the (well-deserved) lender carnage over the past 12-18 months?” says Reed. “Lenders went out of business left and right and along with them their bevy of loan officers.” And, there are fewer mortgage brokers in the business as well, he adds. 
 
The shortage of personnel means that underwriting has ballooned from about two business days a month ago, to almost 10 for conventional loans and five days for government loans, says Reed. Some lenders are taking as long as three weeks after the loan has been fully submitted. 
 
Smart Realtors can do three things to keep their buyers’ loans on track.
 
1.      Get their buyers prequalified by a lender before making an offer on a home.
 
2.      Lengthen the contract term to 45 days to secure financing
 
3.      Encourage your consumer to protect their interest rate with a longer term lock. Remember they can’t lock unless they’ve already applied and been approved by the lender.
 

 Blanche Evans is CEO of Evans Emedia, Inc. and publisher of The Evans Ezine. As an award-winning journalist, Blanche has been named one of the "25 Most Influential People In Real Estate" by REALTOR Magazine, and twice recognized as one of the industry's most "Notables."  

Recent Posts

Next Videos

Related Post

Education

Starting in Real Estate

January 21, 2019

Technology

Is There a Blog in Your Future?

January 18, 2019

Industry, Education

Negotiating Tip 66: Pulling A Concession

January 18, 2019

Industry

Four Tips to Create the Perfect Podcast

January 17, 2019

Industry

Negotiating Tip 65: The Sugar Sandwich Walk Away

January 17, 2019

Industry

Blunt Truth About Cell Phones & Professionalism

January 16, 2019

2019 Real Town The Real Estate Network