Just after the peak of foreclosures and mortgage debt crisis lenders have been working hard to entice new consumers into applying for loans. At first glance, these deals may appear to be a sign of improvement in the industry, but a closer look reveals the consumer may not be getting such a good deal after all.
Come One, Come All
Lenders are passing out deals left and right to anyone willing to sign on the line. Why? Because the rules have relaxed and qualifying isn’t as hard as it used to be, thanks to the help of some Federal programs.
Visit any large mortgage lender and you will find offers for waiving application and processing fees and hot refinancing offers. Many people jump at the chance to refinance a mortgage down several interest points, so why is this not a “good deal”?
It can be a good deal for some homeowners, but many homeowners cannot afford the additional fees and closing costs associated with refinancing. If a homeowner is already struggling with their mortgage payments to the point of considering refinancing, the likelihood they have enough cash in the bank to cover several thousand in closing costs on the refinanced loan is slim.
What would be a good deal? In short, lower rates across the board, not just for refinance offers.