Next to snakes, spiders, deep water and falling down stairs (okay…I have a few phobias!)…and actually this is no laughing matter. There is so much hype in the media right now about the subprime industry and home owners in trouble with 80/20 loans and interest only ARMs, etc. Many people are contacting me to confirm they’re okay or to see if the need to refinance. So far, none of them need to refi (but I’m glad they’re checking with me). Either they’re planning on selling or their ARMs won’t be adjusting for a couple more years and they’re actually quite happy with payments once they step away from the fear factor. These home owners with ARMs and/or 80/20 financing are prime targets for unsavory loan originators to scare them into a refinance (there are even ads on TV soliciting home owners to do so) when they don’t need to. Costing them at least a couple thousand dollars in their equity and rewarding some loser with a commission they shouldn’t have.
How do they do this? For starters, the local title companies can provide list of home owners if they have financing through certain lenders (like New Century, for example), or if they financed within a certain time period with an ARM. The lender may call you (ignoring if you’re on the DNC) or send you a letter stressing their "sincere concern" over your current mortgage scenario. Please don’t buy into it.
- Contact your Mortgage Planner if you have any concerns with your current mortgage. Now may be a good time for a credit and mortgage review–you may not need to refinance (everyone’s situations vary).
- Get a second opinion if you feel you need one. Ask a friend, co-worker or family member for a referral. Most professional Mortgage Planners are happy to discuss your situation without running your credit. (If your Mortgage Planner all ready ran your credit, you can provide your scores to the person you’re getting the second opinion from).
- Do not do business with lenders who have to "cold call" for business. Rely on either your past Mortgage Planner or get a referral.
Bottom line, don’t panic. The worst decisions are made when someone is being emotional and scared. Lenders who are predatory prey on the emotions of scared people. This type of loan originator is ultra smooth…could probably out-sell me (and I’m sure has) on my best day. (I do not view my career as "sales"). Take a deep breath and do some homework. Make the hoopla over subprime loans into a personal opportunity to review your credit and get your finances in order. It will save you in the long run.
With all this said, some people are in trouble…they are not the majority and regardless, it is unfortunate. If you are in financial troubles or if you feel you may be near it, please do contact your Mortgage Professional (or get a referral) right away.
Great post Rhonda! My mortgage reviews have been about half-and-half the last few months. Half of my clients are just fine and the other half have mortgages it would benefit them to refinance.
If wish every individual in our industry could understand they are better served when they put their clients needs before theirs. Fortunately, I do believe there are a great many mortgage professionals (such as yourself) that do.
Thanks, Tony. Go figure…I post that none of my clients have needed to refinance and this morning, I have one that should.
If the subprime meltdown leads to a recession, and recession leads to lower rates, then the ARM holders will benefit by waiting.
Brian Brady
CFL# 6030509
True, Brian. Yet another reason to not panic with your mortgage. Nice license number, btw!