Because of negative sentiment about the economy, we’re in the middle of the first remortgage boom of 2008. There may be others, or this one may last a while.
It’s been a few years since mortgage rates fell so far, so fast. It’s like a Sid Fernandez curveball.
If your loan officer hasn’t called you about taking a lower rate yet, get pro-active and call him (or her, Rhonda). It’s your money, after all.
That said, there are a few key differences from the last time we had a remortgage boom like this.
- During the last remortgage boom, lenders were growing their staff to handle extra capacity. This year, mortgage lenders are working with smaller staffs after major layoffs in 2007.
- During the last remortgage boom, lenders were sprouting like weeds to chase mortgage money. This year, there are far fewer mortgage lenders after the bloodletting in 2006 and 2007.
Complicating matters: mortgage guidelines are very different this year from the recent past. Underwriters don’t know the new standards frontwards and backwards like they did, plus they’re being more careful.
All of this combines to mean that fewer underwriters are processing more applications that each require additional scrutiny. It would be prudent for all of us to expect underwriting delays.
As an example, the “24-hour turntime” notices I used from my investors now read:
“Please allow one week for underwriting”.
Now, at times like this, some loan officers will say to clients and real estate agents that because they can underwrite home loans in their offices, their files are immune to delays when rates fall. There’s some truth in that (and I know because we do it at Mobium), but that doesn’t mean we’re not feeling the pressure of time, too.
Every mortgage broker|banker|lender in the country is experiencing very high volume right now and we are all coping with the same issues about time and resources.
30-day closings are still possible, but it may be better to play it safe at 45. If rates keep falling, we may bump that to 60.
Rhonda Porter says:
Dan, excellent advice. I also love your post about orphaned mortgages. Eventhough I’ve been calling my “kids (clients)” to tell them it’s time to lock, many are out goofing around and will miss this opportunity…at least we contact them.
This (low rates) is a great reason for Realtors to contact their clients as well. By the time the mainstream media picks up on how low rates are right now, they’ll be higher again. They really have a chance to be a hero and to put their clients needs first.
January 16, 2008 — 12:40 pm
Dan Green says:
Thanks, Rhonda. I’ve been hammering my friends in the media about low rates vis a vis shrinking guidelines — the low rates don’t matter much if you no longer qualify for a home loan.
And you’re right about real estate agents.
This week is a terrific time to “turn off the blog” and get in front of clients by telephone or email or video or whatever. There’s no easier call to make to a client than the “I’m saving you money” phone call.
January 16, 2008 — 12:44 pm
Matt in Atlanta says:
Dan, thanks for the post. You’ve just inspired me to contact a few of our buyers that are on-the-fence and tell them that not only now is a good time to get a good deal on a house, but a mortgage as well!
January 16, 2008 — 1:26 pm
Dan Green says:
Real estate agents — look at what Matt in Atlanta is doing. It’s a terrific marketing step.
Low rates and (nationally) low home prices means that buyers have more purchasing power NOW than at any time over the past bunch of years.
Good stuff, Matt in Atlanta. Thanks for chiming in.
January 16, 2008 — 1:29 pm
Brian Brady says:
Amen
January 16, 2008 — 4:53 pm
Jeff Belonger says:
Dan… Damn, this was my line to a few realtors today and yesterday…. lol As several have mentioned, it’s truly a buyers market now.
I saw a realtor make a comment the other day in my post, telling me that his scores are in the low 620’s and he is going to wait until he gets his scores into the 700’s. I told him, because of the new fannie and freddie pricing changes, go FHA and don’t wait. It might cost you more money down the road, even if you get your scores up.
Good advice here….and awareness.
January 16, 2008 — 11:24 pm