Refinancing Boom Isn't for Everyone

Refinancing

People are pinching their pennies in this recession, but now may be the time to look for a house or refinance the one you own. The Utah average on a 30-year fixed rate mortgage is back up to 5.4% according to Bankrate.com. That's a low rate but the business has changed.

Home ownership is looking like a good deal again. There are a lot of houses for sale, prices have gone down and interest rates are low.

"They had some pieces and I told them I just wanted bigger dimensions," said Jennifer Burt as she showed us around her Riverton house. She locked in a rate of 4.6% not long ago with the same loan company she was already paying. It seemed like a simple refinance, but as time was running out on the rate, there were complications.

"Once we got through underwriting, they changed their mind and said, 'Oh by the way, we want a full blown appraisal.' So, we had to pay a second appraisal fee, so we were charged for two appraisal fees," she said.

Delays, stricter requirements, and last minute employment verification seem to be the norm in the financing business these days. Lance Miller finds loans for people and trains loan officers. He says the free-wheeling days of a few years ago are over.

"The problem is credit scores affect your rate a lot more than they used to, so if you have a score below 740 on a conventional loan, your rate goes up," according to Miller. He says fewer than half of all Americans meet that mark and there are no more programs for people with bad credit. And very few loans for the self-employed whose income isn't consistent.

"Lenders are extremely scared of writing a loan they have to take back," said Miller.

Jennifer Burt thinks it's unfortunate people with good credit are paying for other's mistakes.

"You understand why. Obviously, if they had been cautious in the first place, none of this would have happened," Burt said.

People are running into problems with their credit scores or they don't have enough equity in their home anymore. Experts say to also pay attention to run-away fees. Some lenders are trying to pad their bottom line, by taking more money from the consumer up front.