Are Refis Just a Big Hassle?

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Just in case you missed it, mortgage rates are at all-time lows, again. Brexit, low inflation, a stagnant economy, all contribute to the Fed’s ongoing decision to not increase rates. That’s some good news!

Although we’ve seen a spike (again) in refinances, there are still homeowners who haven’t taken advantage of the lower rates? According to a prior Black Knight study, if rates hit 3.5% there would be somewhere around 2.1 million additional homeowners who could benefit from a refi. That would bring the total potential refi eligible loans to about 8.8 million. That’s a lot of potential business.

According to Mike Fratantoni, Chief Economist of the MBA, it’s worth a look if a borrower can lower their rate by a half percent or more. So, why isn’t everyone who might be eligible going for a refinance? Could it be they believe it’s too difficult to get approved? Do they think the process is too confusing and time-consuming?

It’s education time again. Consumers need to be educated on how easy the process can be to refinance their home and lower their monthly payments. In a stagnant economy, it’s like getting a raise in pay. It’s well worth the effort.

It’s important that lenders have the trained staff, systems and technology in place to handle the loan applications and related loan processing.  Lenders need to be  closing quickly and efficiently, making the process as easy as possible for the consumer.

Whether a refi or a purchase, consumers want a process they can understand. No surprises, no last-minute document requests and, most of all, no delays.

BTW, with these low rates, consumers can qualify for more house. So, even with home prices improving, many first time homebuyers may still be able to afford their piece of the American Dream. Existing homeowners have more equity; so they may be in a better position to move up.

The low rates present opportunities for first time buyers, existing homeowners and lenders. Unfortunately, not everyone sees these opportunities, nor has the motivation to take advantage of them.

Maybe, they need a little push.

About the Author

Michael Vitali

Michael L. Vitali – Independent Consultant to the Mortgage Industry Mike Vitali is an independent consultant to the mortgage industry on matters concerning compliance and mortgage lending. He most recently served as the Senior Vice President and Chief Compliance Officer for LoanLogics, monitoring regulatory developments and their practical implications for the mortgage lending industry. His duties included research, interpretation, and analysis of existing and proposed legislation related to the industry in support of recommendations for policy and/or procedure changes to maintain continued quality and compliance with all applicable laws, rules and regulations, investor requirements, and standard mortgage practices. In his more than 40 years in the mortgage industry, in senior level management, he has gained experience in all areas of mortgage lending, risk management, and compliance. Mike is a past President of the MBA of Greater Philadelphia, is a charter member and was the second Chairman of the MBA of Pennsylvania, and a past board member and Legislative Chair of both associations. He is a recipient of the 1998 Mortgage Banker of the Year Award from the MBA of Greater Philadelphia, and the 2003 Chairman's Award from the MBA of PA, and currently serves on several compliance related task forces for MBA.