A couple things are happening in the market so it's best not to delay refinancing if you fear you are in the wrong loan.
Right now we are seeing appraisals that almost across the board reflect declining values. Maybe appraisers are being conservative, but when someone owes 80% on a first, then takes out a 10% second, they owe 90%. If the home declines 10% in price, they owe over 100% of the home's new lower value. In order to get out of an adjustable rate mortgage about to adjust, they may need to bring cash to the table. When homes seemed to be going up $100,000 year in value, it was easy to roll those closing costs into the new loan amount and get some cash out at the same time.
Also working against some refinances are new lender guidelines. In order to keep up with rising defaults on mortgages, lenders are raising guidelines for FICO scores and lowering the LTV ratio they will lend on different products.It is common to see loan products that required 620 or 640 FICO now require 660 or 680. Some products that loaned up to 95% or 100% LTV, now only loan up to 89% or 95%.
Since we are in a period of tightening, the sooner you can make a change, the more you may be offered.
The information above was provided by Laurie Lee Mead of B.F. Saul Mortgage.
You can reach Laurie at email@example.com or 561-573-2122.