Today’s low mortgage rates and
home prices have provided a silver
lining to first-time homebuyers or
those looking to refinance their current
mortgage. While it may not be a good
time for all (such as those who want to
sell their home or those who do not have
enough equity to qualify for a loan),
these low rates are still providing substantial opportunities to homeowners.
“If you need a house and it’s your
house for the next three, five, seven
years, it’s a great time to be looking and
getting yourself into home ownership,”
says Carmen Inclan, residential lending
division area sales manager, Fifth Third
Bank, Tampa Bay.
Smart Business spoke with Inclan
about how getting a mortgage loan has
changed, why now is a good time to refinance your mortgage and what to do if
you might already be in trouble with
your mortgage.
How can new homeowners get a loan today,
and has anything changed with the
process?
All the complex, sophisticated types of
mortgage financing that were around a
few years ago during the real estate
boom are not available today. The banks
and agencies have placed restrictions to
keep from falling back into some of the
questionable lending practices that were
rampant throughout the United States.
Though the process has not changed, the
criteria have been adjusted, and it is now
more difficult to qualify for a mortgage
loan. A few years ago, if you had good
credit, you could get a loan with minimal
paperwork. Today, we are back to the
requirements that were in place in the
early 1990s. A down payment, consistent
income for a two-year period, and a
good or excellent credit rating are
required. Welcome back to traditional
financing, where debt-to-income ratios
have been lowered to 1990s levels.
Is this a good time for homeowners to refinance their mortgages?
This is a fantastic time to refinance a
mortgage. Rates are at 40-year lows. I’ve
seen rates hit these levels, but they didn’t last that long. If anyone can save at
least 1 percent or more on his or her
mortgage, this is definitely a time to discuss refinancing opportunities. Have
your banker complete an analysis, discuss how long you plan to own your
home and determine your housing objectives for the next several years.
What should people who are already in
trouble with their mortgage do?
Troubled mortgage borrowers should
call the bank where they send their
mortgage payment, ask for the loss mitigation department and speak with a loss
mitigation specialist to see if there are
any hardship programs available to
restructure their existing mortgage. It
sounds easy to do, but it depends on
what company owns the mortgage note,
as not all mortgage servicers own the
mortgage notes that they service. When
making the call, know that the company
may not necessarily have the decision-making ability to renegotiate your loan.
The servicer must contact the mortgage
note holder to determine if modification
is an option. This is where a lot of people
are slipping through the cracks. They are
having a hard time reaching someone at
a lending company who has the authority to discuss loan modifications. If
homeowners are sending their payment
to the same company that owns the note,
they are going to have much more success finding someone to help them
restructure their loan.
How long should we expect these low rates
to last?
We will know in the next six months
how much longer this cycle of price
depreciation in housing is going to last.
When Congress performs activities to
stimulate the economy, it doesn’t happen
from one day to the next; it takes time
for those activities to take hold in the
marketplace. Once the stimulus packages are executed by Washington, we
should have a better idea of how far
ahead the light at the end of the tunnel
will be.
CARMEN INCLAN is residential lending division area sales manager, Fifth Third Bank, Tampa Bay. Reach her at (813) 306-2585 or
[email protected].
