Last Chances to Refinance?

Being stuck in traffic is annoying. But it’s devastating if it gets you to the station at 10:26 AM for a train that was scheduled to leave at 10:25 AM. You stand there like a dummy, watching the train pull away – without you on it – and kicking yourself for not leaving a few minutes earlier.

The mortgage refinance train may also be leaving the gate without you if you don’t act soon to take advantage of current low rates. At last week’s Mortgage Bankers Association’s (MBA) annual meeting, the group predicted that interest rates would end their romance with historical lows, and begin an upward trend in 2011.

Short time left for refinance

The MBA expects mortgage rates to begin their ascent during the next few months, and continually rise throughout the end of 2011. Even if the Federal Reserve decides to take actions to simulate economic growth, the Association believes it will have little effect, because a move by the Fed is already priced into the market.

The number of current mortgage refinancings is at record highs, thanks to these low rates. Applications for refinancing have more than doubled since the beginning of 2010, and currently account for more than 80 percent of the mortgage market. That’s one crowed locomotive. It’s not surprising because, according to Freddie Mac, mortgage rates in October hit the lowest point ever since they began tracking data in 1971.

Avoiding traffic

With such an abundance of refinances in the pipeline, banks are backed up in processing time. Therefore, time is of the essence for you to get in the holding area for refinance approval. Here are some tips that will help.

Get your paperwork in order. You’ll need:

• Two years of federal tax returns
• W-2 earnings statements
• Bank statements for the past two or three months
• Proof of other income, including investing, alimony, tips, or Social Security
• Homeowner’s insurance policy

There are two ways to speed up the process with your mortgage lender. First, check with the bank that holds your original mortgage. You already do business with them, and you may have a personal relationship with a loan officer at that institution who can help move your refinance through the pipeline. You may also be eligible for a reduced rate because you’re an established customer.

Another option is to use a mortgage broker, who has experience with the loan process and knows how to manipulate the system to your advantage. A broker can also cut down on your research time, because he will do all the shopping around for you.

If you’ve been considering a mortgage refinance, this might be the last call for “All aboard the low interest rate train.” Don’t get stuck at the gate with nothing but a useless ticket and regrets for not having made your move sooner.