In Which We Opine on the Refinance Market

by Alex Stenback on August 8, 2011

Amy Hoak at Marketwatch pulls a couple of quotes from your favorite Mortgage Banker with a blog:

“We’ve got a generation of borrowers out there who have been paying on their mortgages… and carrying an above-market rate, but can’t refinance because the appraisal won’t allow them to do so,” said Alex Stenback, mortgage banker for Residential Mortgage Group, in Minnetonka, Minn., and writer of the blog “ Behind the Mortgage .”

Yes, that was me quoting me being quoted, for those keeping track.  Raising navel-gazing to a whole new level.  There’s much more.

The broader point of the article is a good one – that the recent drop in Mortgage Rates will open a window of opportunity for some borrowers whose circumstances have changed or might have simply missed the boat the last time rates were at these levels, but won’t start a refinance boom.

BUT: Refinancing is a trickier undertaking than at any time in recent memory – lack of equity, credit quality, and exposure to ‘loan-level price adjustments’ (add-on fees from Fannie/Freddie based on transaction specific characteritics such as loan-to-value ratios) add significant challenges – so do your homework, identify quality lenders to work with, and be prepared for uncertain outcomes, especially when it comes to value.

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