Friday, May 11, 2012
Trying to Get a ReFi is Crazy
My bank, which shall remain nameless but has a lot of barbarians running around in their funny TV ads, keeps suggesting I refinance my mortgage.
Okay, fine. Any mortgage obtained nearly a decade ago, when mine was, is likely to be at a loan rate far in excess of current rates. Refinancing to a lower rate sounds like a wonderful idea. I save interest over the life of the loan, I don't have to do a full loan application because it's with the same bank, and my monthly payment goes down. Also, they claim they have a "no closing costs" loan. No closing costs, that's music to my ears. I don't have to comparison shop, just talk to my own bank. Sounds great.
I call the bank. I give them information over the phone, and I know they have access to lots more because I also have checking and savings accounts with them. So, right away, they know I am solvent, that I've been paying the mortgage on time for eight years, and that I even have cash sitting idly in a rainy day savings account. And then they ask me what my house is worth today.
THEY WANT ME TO GUESS WHAT MY HOUSE IS WORTH TODAY.
Ha-ha-ha. Guys, I'm not a real estate agent. I'm not a mortgage underwriter. I'm not a home appraiser. I have no blinking clue what my house is worth today.
People in my state are out of work and the industries that used to employ them have packed up and left. People in my state think they're doing okay if they live in a trailer they actually own. People in my state are making it day-to-day through the financial help of relatives.
What is my house worth today? Is the middle-class castle on the hill worth anything if the people down below are starving? I don't have the answer to this question.
The nice lady on the phone insisted that she could not pass my information on to a mortgage specialist until I gave her a guess at what my house is worth. Her computer wouldn't allow it. It wouldn't allow "zero," either. Finally, I just gave her the purchase price I paid.
I hope this bank knows what it's doing, but asking me to value my own home shakes my confidence in the refi process. And in its likelihood of success. I have this sinking feeling that the big smart bank does not have a clue about the value of my home and thus my potential loan-to-value ratio. In fact, the bank may just be in the business of taking applications hoping to get my application fee.
Hey! I thought it was a "no closing costs" loan. It is, but there's an application fee of close to $500. Oh.
Now I suspect refinances are just another category of modern banking craziness.