Over 5 Trillion in Mortgages
That's right. It is estimated that of the 11 Trillion mortgages in America, approximately 5 Trillion qualify for a refinance. Allow me to put this in perspective. In a really GOOD year of refinances, you may have 1 to 1.5 Trillion in refinances. That's ALL YEAR. Now imagine the capacity (and liquidity) challenges facing lenders when trying to fund a huge number like that but only in a mere matter of months! It can't be done.
Most every company has had to take emergency action to stay in business. Here are some of the things I'm hearing.
- Lenders increasing rates to halt or slow down volume (purchase and refinance)
- Lenders not honoring locks for loans not final approved and ready to close.
- Lenders not accepting refinance applications AT ALL until July/August.
- Lenders not funding loans (no lines of credit!) and having to broker.
Thankfully our company is not in any of the last 3 buckets, but we have taken steps to stem the mass volume refinances. "Get through March" they say, and I hear you. Bottom line, it's a scary world and our industry needs a lot of prayer.
How to cheat the system
I'm basically giving you insider information as to how to cheat the system when the next flurry of low rates come around. Below is how to be ready to lock before everyone else even knows what's going on. Note: when lenders have more liquidity and there is some stability in the markets, rates will be favorable again. Pardon the strong-arm, but here is what you MUST do ASAP unless you enjoy standing in line.
Get an application on file
It takes quite a while for a loan officer to prepare your loan to be locked. It's not just a phone call or email saying "lock it in" and it magically happens. It requires a full application on file. I suggest you complete an application with your lender today. Just completing an application allows your loan officer to lock your loan with just a few clicks.
Verify everything digitally
Most online applications give you the ability to pull your own credit and digitally verify your income and assets. In every loan scenario this is advisable, but ESPECIALLY if you are trying to start a refinance process before millions of others. Electronica verification is secure and It saves time, especially your loan officer who may have hundreds more in their queue. Me? I'm working on the clients first that have an application on file.
Set a Target Rate (and costs)
Have an agreement with your loan officer to lock at a target rate with a closing costs number. Example, if the rate gets to 3.5% with no more than $5000 in costs, then LOCK IT! You see, the mortgage markets are like a spigot or valve. Recently, the availability of mortgage money gets turned on and off every so often. Some days, I've seen it on for only for a few hours and then off again. When your rate hits, your LO needs to be able to lock in without having to track you down.
Fill out an application, verify everything you can, agree on a rate and costs, and just be patient knowing you're at the front of the line.
www.loanwithrick.com with any questions. ~Rick