Still, "the world should not be worried that they cannot refinance," said Jerome Scarpello of Leo Mortgage in Ambler. "We do them every day. It's just a lot more involved."
In today's environment, Scarpello said, borrowers should expect to be asked all sorts of unusual questions. Such as: "Where did the $500 deposit into your checking account come from?" Or, "Why does your W-2 say, 'Caesars Operating Co.' when you work at Bally's casino?"
Appraisals are another issue, he said, because many people are surprised to learn that the value of their homes have dropped to a point where they can't refinance.
"Those who have good credit, equity in their homes, and stable employment - they will get funded," Scarpello said.
For a well-credentialed homeowner, refinancing to such low rates can result in sizable savings - if you are able to find the best deal.
With an eye toward that, Lending Tree CEO Doug Lebda offered these tips:
Maximize your savings by shopping around with different types of lending institutions and multiple lenders, as the actual rates available to borrowers can vary significantly.
Compare actual offers based on your credit and income profile, not just rates from a table. Be sure to assess all aspects of the offers - interest rate, points, and fees - and ascertain that the mortgage products are, indeed, the same.
Research lenders' ratings and reviews; customer service and integrity are key to getting a good deal.
Find a lender who will commit to a specific closing date and has the capacity to fulfill it.
When you refinance, you pay off your existing mortgage and create a new one. You may even decide to combine both a primary mortgage and a second mortgage into a new loan.
Why refinance at all?
According to the Federal Reserve, lowering your interest rate is Reason No. 1.
The interest rate on a mortgage is tied directly to the amount of the monthly payment; lower rates typically mean smaller payments.
