Log Jam
by Craig Goebbel
President & CEO, LoanTek, Inc.

Picture I-5 at rush hour during the summer, under construction, it is raining, there is a big event at the Tacoma Dome and there has been an accident. You know the scene, traffic is barely moving because only one lane is open each way and the laws of physics dictate two objects cannot occupy the same space at the same time.

This is the picture you should keep in mind when you commence refinancing your mortgage. Mortgage lenders have been slammed with new business and the entire system is bulging at the seams.

Consider the following, a month ago the industry had the ability to take an application over the Internet, submit the application electronically and deliver documents via email to the escrow company. We can also order our appraisals, credit reports and other required exhibits over the Internet. All of this could literally be accomplished in well under an hour in many instances.

Now, we have unprecedented demand teaming up with these new technologies and loan originations are piling up in every office.

Here is an example: one of our wholesale lenders locked in over 1,700 loans in less than an hour on Thursday and this is just one wholesale lender among hundreds around the country.

We may have created super efficiencies in certain areas of the mortgage business but it still takes real people, doing real work to generate the appraisals, complete the title reports and order the pay-offs in order to get your refinance ready for closing. And, you still need to sign all of the documents in front of a real person with real signatures. All of this takes time.

Can the industry hire more people to do the work? Of course, but when demand increases this quickly and in such volume you cannot staff and train quickly enough to avoid slow downs. Will interest rates stay this low long enough for everyone to get through the system before their locks expire? No one knows that answer.

What does this mean for you?

If you are planning on refinancing get started now if you want to be finished before the end of the year. Be prepared to jump start your lender by having all of your income, deposit and investment documentation ready when you submit your application. Don’t lock for less than 45 days unless your loan is already in process. Don’t delay. Yes, rates could go lower but with the world political situation in its current state any number of things could trigger a hike in rates.

© 1999 - 2004 LoanTek

Craig Goebbel is President and CEO of LoanTek.com, mortgage loan brokerage.  He is also producer and host of Real Estate Radio Show, a Seattle-based talk show featuring mortgage and real estate news, interviews and listener calls. It is broadcast on KVI Radio AM 570 in Seattle, Washington. Past show are also webcast via the Internet at http://www.realestateradio.net.

Real Estate Radio Sponsor

Real Estate Radio with Goebbel and Gray is the leading real estate radio talk show in the world and is hosted by Real Estate home mortgage expert Craig Goebbel, owner of LoanTek Home Loans and Robb Gray of John L. Scott Real Estate.