On the House: Learn to love the mortgage you have

Posted: November 27, 2011

In a recent "Ask Al" online chat at Philly.com, a reader posed the $64,000 question:

What's the point of interest rates being as low as 3.9 percent when no lender seems all that eager to give you a mortgage, or to refinance the one you have?

Rather than being a call to take advantage of a bargain, low mortgage-interest rates are a reflection of the sorry condition of the economy.

If investors, fearing a resumption of recession, pull their money out of the stock market and put it into safer Treasury bonds, mortgage rates respond by dropping.

Even if rates were at 1 percent, it wouldn't matter if you didn't have the down payment or credit score to qualify for a mortgage.

During the same chat, someone asked whether it would be worth refinancing from 5.25 percent to 3.9 percent. My response: It was highly unlikely that he could get that rate, given the current lending climate.

Recently, I went online and punched in all the information necessary to shop for mortgages. All the responses I received appeared not to be very serious.

The best I could do on a fixed interest rate for a 30-year mortgage - remember, this was an exercise and nothing more - was 4.45 percent with one point and 4.75 percent with no points.

Those last two words sum up my decision: There is no point in my refinancing. I am happy just to mail my payment every month to wherever the heck the thing goes, plus a little extra to pay down the principal a bit more, and watch my property taxes keep climbing.

Perhaps if I could just refinance my property taxes . . . .

I've listened to consumers complain about lenders. The consumers have included those in financial trouble, as well as people who have plenty of money in the bank and high credit scores who simply want mortgages or just to refinance.

I'm sure I fit into the second category. I just don't think having to deal with this byzantine process - unless you have to - is something worth the time doing. The money I'd be saving each month, as far as I can figure, would equal the amount by which I have been paying down the principal for a very long time.

Yet no matter how many times I say no thank you, my lender insists on offering me another chance to refinance to a lower rate.

It's just a chance. The letters say I may be eligible to refinance, meaning I'm being offered the opportunity to jump through a number of hoops and get innumerable phone calls and messages for additional documentation, as well as the opportunity to roll in unnecessary fees and points into a mortgage that I've worked to pay down to a level that, after 10 years, I am perfectly happy with.

The one thing I've liked about the financial meltdown is it took with it a lot of the mortgage brokers who worked out of their cars and used to send me letters offering exotic loan products I would have been out of my mind to get sucked into.

Unfortunately, too many people did get sucked in, and here we are.

What fascinates me is the UPS overnight letters I get from my lender on its fishing expedition for more fees and charges it can roll into my new mortgage and then charge me interest on.

I remember one arriving in the summer, when my wife was working from home and she got the mail first. I forget where I was exactly when she called, but her first question was, "Were we late with the mortgage?"

I told her what it was. She was shocked the lender would waste thousands of dollars on thousands of similarly overnighted offers.

The way they cry poverty, you'd think lenders would want to save money, not waste it. Then again, it is your money they're wasting, not theirs.

Contact real estate writer Alan J. Heavens at 215-854-2472, aheavens@phillynews.com, or @alheavens on Twitter.

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