Where Have All The Refinances Gone?

Refinancing your home was definetely at the center of the economic party a couple of years ago. Not any more, the number of refinances in the Santa Barbara area has slowed to a trickle.

I am going to have to change the way I format my chart pretty soon, because in some areas the number of purchase loans is outnumbering the amount of refinance loans being done in a given month.

The Santa Barbara, Goleta, Carpinteria, Montecito areas haven't quite seen the number drop that far yet, but it is the lowest it has been in years.

A year ago, all I kept hearing was that this year could possibly end up being one of the biggest refinance markets we would ever see. The folks predicting this were seeing the huge number of loans that were going to be adjusting and determining that they would all refinance.

Many borrowers were opting for programs like a fixed for 5 year loan and those loans are all about to adjust, if they aren't already. I guess the borrowers are just not being hit with the large adjustments up in their payments and or they are stuck with the loan they have since lending standards have tightened.

Whatever the reason, the refinance party is over. Someone turn out the lights.

The State of Home Financing in Santa Barbara

Our escrow staff was fortunate enough to have a loan professional come talk to us at our meeting this morning. I wasn't really sure how well it would go, but it was a terrific forum for us to share what we are seeing on our escrows as well as hear what type of financing is out there.

I wasn't sure that the raising of the conforming loan limit that happened with the economic stimulus package had really helped people who were borrowing between the old limit and the new limit of $729,750 but it is.

If you are wanting to put less than 20% down on a piece of property and aren't needing to borrow more than the new limit an FHA loan has some possibilities for you. We were even told that there are some down payment assistance programs you can use in conjunction with this financing that could really lower your down payment.

We were told that there are still some sources for loans between 2 and 5 million although people who borrow these amounts usually do it for a short time since their isn't any tax benefit.

This lender also told us that they are not viewing Santa Barbara as a declining market any more and they will loan you over 1.1 million with 20% down.

There were some comments made about home equity loans being frozen and we found out that with this lender even though you may have received a nasty letter from them, if you get in touch with them they have been able to unfreeze your line. They can even help you put on a new HELOC.

One other interesting product that was mentioned is the construction to permanent loan program they have. With between 20 and 30% down a buyer can purchase a tear down and as an example get a 1.5 million dollar construction loan on a $750,000 purchase price.

I left our meeting thinking that many folks don't understand the opportunity that is out there. The opportunity buyers who need to borrow less than the $729,750 when purchasing a property could come to an end this year. If you need more information, just shoot me an email and I'll let you know who to contact.

Spread the word!