| Fed's rate cuts ignite a rush to refinance
A positive note in the chorus of bad economic news sounds loudly, like a call to arms. Or, as happened after the Federal Reserve dropped short-term interest rates three-quarters of a percentage point Tuesday, a race to refinance. The refinancing frenzy began right after the Fed's announcement, local brokers and bankers reported. The 10-year Treasury bond rates on which fixed mortgages are based also fell, and interest rates for 30-year loans plunged as far as 5.125 percent, the lowest level since spring 2004. On Jan. 1, the 30-year fixed rate averaged 6.07 percent; it has ranged between 6 percent and 6.5 percent for two years. Though the number of refinancing applications will not be available until Wednesday from the Mortgage Bankers Association, newspaper and television accounts from Bangor, Maine, to Los Angeles described a boom in activity.
Inland homeowners ponder refinance timing
Mortgage holders wanting to trade an unwieldy adjustable-rate mortgage for the certainty of a fixed rate are rushing to refinance in large numbers since the Federal Reserve's surprise rate cut earlier this week. In the past two weeks, Bank of America has seen a strong and accelerating increase in refinance applications, said bank spokesman Terry Francisco. Last week, applications were up 193 percent from a year earlier. The week before, they were up 82 percent, he said. The same is true for online brokers. "We started getting a few calls last week, but on Tuesday (when the Federal Reserve Board announced its rate cuts) it was like a tidal wave," said Jeff Lazerson, president of Mortgage Grader, an online mortgage broker. He said that most callers had adjustable mortgages scheduled to reset to a higher interest rate.
Home loan refinance goes terribly wrong
Q: I have been frantically searching for help regarding my refinance five months ago. I specifically asked the loan company for a fixed-rate mortgage with no prepayment penalties, with payments between $1,300 and $1,500 a month. My loan officer said that it would be possible. A week later, I received documents from a bank for an interest-only loan with a prepayment penalty. I called the loan officer and he told me to disregard that because he was working on another loan that would be more to my liking. I ended up accepting an interest-only loan, because I was told that the loan I wanted would have insurance requirements. Before I signed the paperwork, I asked what I would be paying per month. The loan officer told me it would be $1,481. Great! About a month ago, I was looking at my payment receipts and saw a negative principal balance of almost $5,000.
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