My refinancing revelations

It’s a rare day that something truly shocking happens. Last month, I was shocked. My wife and I are going through the process of refinancing our mortgage, and one day in May we received a call from the bank with the results of our appraisal. I wish we missed that call.

We expected a low number, but not this low. Zillow.com is way, way off the mark. Not even close, really. Equally as significant as the low home value was the number of foreclosed or distressed homes in my neighborhood. I’ve known that Illinois has had one of the highest rates of foreclosure in the country, but when reality hits so close to home, like I said, it’s shocking.

Aside from realizing how depressed my local housing market is, another realization was how the refinancing process has changed since the last time we refinanced roughly eight years ago. Today, there are many more hoops to jump through, as well as checks and balances. For example, our agent faced a hefty fine when we considered backing out of the deal early in process. Additionally, the bank has called each of our employers twice in a month to confirm continual employment. Furthermore, not only did we submit proof of insurance, but we had to supply our agent’s contact information. Several requests for additional documentation were made of us along the way, too. All of these steps seem like common sense to us, yet none of them took place the last time we refinanced.

In addition, eight years ago while the appraiser stood in our kitchen, he asked us, “Where would you like the value to be?” (We were eliminating PMI at the time.) So we told him, and that’s where the appraisal came in. This time, the appraiser informed us that not only should we tell him nothing, but he is legally forbidden to speak to our agent during the process. Again, this seems like common sense, and it was nice to see these steps being followed by those tasked with following them. If these procedures were in place eight years ago, who knows how much better the economy would be today?

On one hand, it was reassuring to know that attempts are being made to correct the mistakes of years ago. On the other hand, every builder and architect I've asked has told me that banks remain too stingy when it comes to lending money to potential clients.

Anyway, with no plans to move in the near future, thankfully the low home value doesn’t affect our immediate goals. Selling our home would make no financial sense anyway, so we will stay in place spruce it up a bit while we wait for values to climb up.

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