(Above) New homes in the North Side community of Sauganash.
Second of two articles on refinancing your home loan.
17-Nov-19 Financial sharks and birds of prey are stalking borrowers in the world of Mortgageland, experts say, and the goal of every borrower seeking to refinance should be to graduate from home-loan school and learn to swim and fly around them.
The worst thing a family seeking an affordable deal to refinance their home loan at a good interest rate is search the internet, warned Brian Bockholdt (left), assistant vice president and mortgage sales leader for The Huntington National Bank based in suburban Downers Grove. If you go to Lending Tree, thats where the home-loan vultures fly. Lenders are paying for borrower leads. They will hound you and hound you.
Thats exactly the experience one homeowner recently had while seeking a good deal on a refinance for his North Side house after his current lender boosted his interest rate to 4.75 percent from 3.625 percent when his seven-year adjustable rate mortgage rolled over.
Searching for a better deal, he logged on to LendingTree.com, gave his personal information, and was immediately bombarded with robo phone calls and emails from a half-dozen lenders urging him to refinance with them.
One articulate, fast-talking loan originator from Michigan-based AmeriSave Mortgage called the borrowers mobile phone within minutes of the internet inquiry. He quickly quoted a 3.625 percent rate on a new cash-out seven-year adjustable-rate mortgage.
The loan man promised no loan preparation fees, a 30-day turn time, and an interest rate lock with a float-down if rates moved lower. The maximum loan amount could not exceed 70 percent of the appraised value of the property.
If it sounds too good to be true, it likely is. Under terms of the hypothetical $480,000 loan, the lender said the borrower would have to pay a minimum of $3,701 in closing costs, which typically includes appraisal and title charges, county recording fees, and points, or special loan fees lenders can charge.
However, on a cash-out loan the closing costs could rise to $5,300. Thats a huge amount of loan fees.
Luckily, the borrowers Realtor received a sales pitch from The Huntington National Bank, which recently entered the Chicago-area home-loan marketplace. Huntington, a $100 billion institution, is the biggest bank in Ohio and also has a strong business presence in Michigan.
Huntingtons marketing plan is targeted to building a loyal client and customer base in the Chicago area by offering below-market mortgage interest rates, coupled with low or zero closing costs.
The bank also offers borrowers a lower mortgage interest rate if they are willing to become customers of the bank by pledging funds and opening new money market and checking accounts.
Another unusual feature is that Huntington will make portfolio loans, which means your mortgage will stay on their books and be serviced by the bank, not sold to Freddie Mac or Fannie Mae in the secondary loan market. Thats a very good thing.
Even when Huntington sells the paper to Fannie Mae or Freddie Mac, Bockholdt said it still services the loan and borrowers make their monthly payments directly to the bank.
Here are the terms of the new $497,000 Huntington cash-out seven-year ARM offered to the North Side homeowner...
A rock-bottom 2.85 percent interest rate amortized on a 30-year schedule. The rate is locked for 30 days and has a float-down provision.
The rate is 0.775 percent below the going 3.625 percent rate for a seven-year ARM and a whopping 1.9 percent below the 4.75 percent rate the borrower was paying on the rollover loan.
To lock in this below-market rate the borrower agreed to open a $25,000 money market account at Huntington National Bank, 4012 North Pulaski Avenue in Chicagos Irving Park neighborhood. Plus, the bank offered a sweet, above-market two percent interest rate on the account with a special coupon for new customers.
The borrower paid a $495 appraisal fee and the more-than-adequate appraisal came through within a week.
Huntington does not charge for title search, county recording fees, and points. Total closing costs are only $500 including the appraisal fee on qualifying properties.
Now, thats how to shop around for an affordable refinance mortgage.
Bockholdt, a 25-year mortgage professional, can be reached at 630-210-4205 or email@example.com.
Mortgage rates tick up
On November 14, Freddie Macs Primary Mortgage Market Survey reported that benchmark 30-year fixed-rate mortgages averaged 3.75 percent nationwide, up from 3.69 percent a week earlier. A year ago, 30-year fixed loans averaged 4.94 percent.
Fifteen-year fixed-rate mortgages averaged 3.2 percent, up from 3.13 percent a week earlier. Last year at this time, 15-year fixed loans averaged 4.36 percent.
In the Chicago area, Mutual of Omaha Mortgage was quoting 3.75 percent on a 30-year fixed home loan and 3.375 percent on jumbo seven-year ARMs, reported RateSeeker.