“the amount of research, documentation and due diligence that is required of lenders is expensive”
No, it is not. You’re talking to a guy that has created computer systems for the mortgage industry and I understand the process extremely well. The amount of bullshit in the industry is amazing. Everyone has their hand in the pie but few add any value to it. I can buy a $50,000 truck right now within the hour and drive it home, but to buy a $50,000 property that I cannot move takes nearly an act of God and thousands of dollars in “fees”. The ONLY people that add any real value and do any real work are the title companies. The rest simply process unnecessary paperwork and want to be paid a kings ransom for it.
And even that's questionable: make the title on file with the town the official one and require all leinholders to file notice with the town, and the need for a title search goes away.
Mortgage rates recently fell to 4.25% for a 15 year loan. I went in to investigate the benefit of refinancing. I asked what closing costs would be, since the advertised rate was “no points, no fees”.
The bank loan officer called their finance arm, asked for closing costs, who estimated north of $3,200 to refinance my $16,000 loan.
While I was there, I asked about refinancing my $30,000 car loan. She said there were no fees. All I needed was a $15 fee to California DMV.
I grilled her on the fact that my car loan would be free but they wanted $3,200 to re-run a stinking loan on a home I ALREADY OWNED. They had a schedule of fees included sitting on the desk, and when I added them up it came to around $1,500. I’m sure their costs have risen since the sheet was printed and laminated, but still, we are talking about $1,500 in PROFIT just for writing a new note.
This was not a new house purchase. Just a refinance. An appraisal and new loan is all I should need, a couple of hundred in fees at the very very most.
I told them to shove it.
I went home and did the math and found that that my break even point was at about 7 years.
The bottom line: they would make as much money off fees for my refinancing as I was going to save.
They can go to hell. As far as I am concerned, they won’t see a penny from me unless rates go to 3% AND I can negotiate a low closing cost. I’ll pay off the house on accelerated payments and make sure they make the least off me.
I am STILL FURIOUS that they would steal half my savings just for rewriting the note on a home I already own and have only had 2 years.
They are a good Savings & Loan and I am very happy with them, but they lost a fee paying customer with their greed. Screw em.