If you didn't refinance yet.............

If you did not yet refinance, and conditions have been such that you would have benefitted in some way, you need to keep some changes in mind if and as you revisit the possibility in the weeks to come.

Fannie and Freddie have added what they call "loan level price adjustments" which take effect on April 1st - no fooling. It looks like the only way to avoid these extra fees is to have a FICO score of at least 740, and that isn't easy in today's economic client.

Yet, it could depend on which lender you would use. It is believed that some lenders (and we don't know how many or how few) already have incorporated these "extra" fees into their costs during the first quarter. While doing so likely cost some borrowers more than it should have, this does mean it is possible that a quote of costs you may have recently received could include these figures.

Thus, if you are planning on contacting one or more lenders about doing a re-fi in the near future, please clarify about the impact on these additional fees. If it could cost you a few hundred dollars more than you anticipated to get a re-fi done, factor it out against your total and actual monthly savings.

I have also heard about some lenders increasing their underwriting and processing fees by as much as $300 to $400. On one hand, I can understand this because many lenders have to work harder to put loans through because of the new credit concerns and restrictions. But on the other hand, the lenders need these loans in order to survive and a reduced profit is a lot better than none at all.

My point is that if the new costs and additional fees were to, for example, result in an additional $1,200 cost, you could look at it that it is really costing you an "additional" $100 per month over the first year. If you are refinancing to save, say, $150 per month, your savings would really be equal to $50 per month for your first year. Is it really worth it?

On the other hand, I have heard too many "I'm going to wait and see what happens" stories from both consumers and lenders over the past few weeks. My fear is that too many people will wait an additional 6 months or so to refinance to THEN start saving a couple hundred dollars per month. But in waiting, they paid the "extra" $200 per month (total $1,200 using this example). Add another $1,200 for the additional fees just described, and a borrower could, in effect, have paid $2,400 more because they waited. Probably not enough to offset the lower rate they waited for.

By all means, check with different lenders and examine everything you are being quoted.

If you are lender, be sure you explain the new fees and their impact on potential borrowers so that you don't leave them disappointed. If you are a realty agent, you might wish to help your client consider the merits of refinancing vs. a downsize or lateral move for greater monthly savings in this economy. Doing that could produce either an immediate or long term sale for you.

If you are thinking refinance, think it now!

About half of my work week consists of contacting mortgage lenders and brokers around the country, including current and potential clients. Some appear to be holding the "wait and see" attitude regarding campaigning for business, including refinances. They could lose out, just as consumers could, by not looking into a refi as soon as possible.

Personally, my wife and I took advantage of the quick dip a year ago and reduced our monthly mortgage payment by more than $200 per month while the getting was good. I already know that this latest dip isn't worth it for me, but that's because I have been working with realty agents and mortgage lenders for 20 years. I'm not like most home owners and potential buyers out there.

Lowering the monthly payment is not the only reason for a refi. Just because the amount due is lowered on a refinance, it doesn't have to mean a reduction. Paying the $200 per month (or whatever you save) toward the principal will make a difference in the long run.

Yet, many mortgage lenders are playing the "wait and see" game and it keeps consumers from finding out the advantages of refinancing now if it makes sense. The smart ones have already done so, some at higher rates in late 2008 than what is out there right now.

Freddie Mac reports that U.S. homeowners cashed out over $17 billion (that is BILLION) in home equity through the refinance of prime first-lien mortgages for in the 4th quarter of 2008. That is the lowest amount since the first quarter of 2001. Statistics show that 14% of refinancing homeowners paid in extra money when they refinanced, reducing their mortgage debt. This is the highest cash-in share since the fourth quarter of 2004, when 19 percent of refinancing homeowners put cash into their home equity.

Not only that, but by playing the "wait and see" game, the additional funds being paid each month until or unless you refinance your home are going to add up. In other words, if you wait 6 months to save $300 per month instead of $200, it will in effect cost you an additional $600 by waiting.

In addition, there are no guarantees to home owners that the fees involved with a refinance will not rise between now and six months from now. Using the example in the previous paragraph, if six months from now the lender's fee to refinance increased even $500 from today, your waiting for better rates would actually be an additional $1,100 out of your pocket. (Compare that amount with your current monthly payment!)

This while I talk to homeowners who "figure" the mortgage rates will go down even further this year, and to lenders who want to "wait and see what happens". Seems to me there are a lot of homeowners who should know their mortgage refi options.