Wednesday, May 20, 2009

Refinance Battle Plan

Today's Personal Journal section of the Wall Street Journal had a great piece on refinancing your mortgage. The entire article can be found here (you may or may not need to be a subscriber). While some items on the refi checklist are the same as they've ever been (ensure you have equity, check your credit score, etc.), there are some newer concerns that every real estate agent, loan officer and borrower should be aware of.

- While not a completely novel issue, you should know that jumbo money (loans in excess of $417,000 in most places) is not as cheap, and will typically come with a larger interest rate than "conforming" loans backed by Fannie Mae and Freddie Mac.

- Ideally, you have at least 20-25% equity in your home. If you don't, however, you may still be eligible to refinance at a lower rate through the Making Home Affordable program. Clink here for details.

- How a lender obtains an appraisal as changed effective May 1st as a result of the Home Evaluation Code of Conduct. Here is a nice breakdown from another blog on the real life impact of this change.

- Second mortgage and home equity loan holders may be less likely to stay in second position than in previous refinance booms. If you have a second, you may want to check with that lender before commencing the refinance.

- Condominiums are becoming more difficult to finance, as the lender underwriters are looking more closely at the condo project as a whole (not just your unit).