How to refinance

Wall Street credit markets are still sluggish and skittish, and questions still hang over mortgage lending ij the public mind, but refinancing mortgage and consumer debt still is not only possible but remains a good way to get ahead, lenders and borrowers said.

By Richard Mize, Real Estate Editor Published: April 25, 2008
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Wall Street credit markets are still sluggish and skittish, and questions still hang over mortgage lending ij the public mind, but refinancing mortgage and consumer debt still is not only possible but remains a good way to get ahead, lenders and borrowers said.

Getting a lower interest rate on home debt, reducing a monthly house payment, consolidating debt, getting cash out of home equity for a special purpose — all are still available to homeowners with some equity in their home.

Having “good” credit helps, but even that isn’t always necessary, to hear Shawn Mason tell it.

The Moore man refinanced the loan on his home, a 1,410-square-foot house built in 1968, specifically to get his credit back in shape following bankruptcy.

Mason, 38, said he was working as a commercial framer in 2002 when he got hurt on the job so severely he had to quit and live off of credit cards into 2003. His creditworthiness went down the drain. He filed for Chapter 7 bankruptcy protection and all of his creditors were notified.

He said his attorney advised him not to reaffirm his home loan through Wells Fargo. Mason said his house payment was the one he made sure to always pay, and always pay on time, but because of the bankruptcy Wells Fargo stopped reporting his on-time payments to the credit bureaus, and his credit scores plummeted.

Mason said his wife, a Realtor associated with EXIT Bob Linn Real Estate, knew Scott Senner, a mortgage consultant with First Commercial Bank. Senner said the bank listened to Mason’s predicament, saw he’d never been late on his house payment and a few months ago originated a loan so he could refinance his house with a new loan, since bought by M&P Bank.

Mason said he bought the house in 2000 and had equity in it after seven years of payments and the increases in property values Oklahoma City enjoyed over that time. He said he refinanced not for the half percentage point improvement in the interest rate — from 6 ½ percent to 6 percent — and not to consolidate other debt, but for one reason: to get a lender who would report his steady house payments to improve his credit.

It worked.

David Poindexter refinanced for a more typical reason: to get cash. He said he refinanced a house he owned in Durango, Colo., to get money to remodel it to sell. He did, at a profit.

Poindexter, a Realtor associated with Keller William Realty Northwest in Oklahoma City, said people shouldn’t assume that they can’t refinance — or that now is a bad time to do so. Home equity can be put to use, especially with mortgage rates still at historic lows.

“Don’t ever say you can’t do this. Say maybe,” he said. “Get with a competent lender and Realtor and see what you can come up with.”

David Feisal, the SpiritBank lender who refinanced Poindexter’s house — and has worked financing on some 800 home sales Poindexter has handled as a Realtor — agreed that researching lenders, interest rates and related costs is important for anyone considering refinancing a home and other debt.

Other considerations?

“Determine what you want to accomplish with your refinance: lower your rate or term, home improvements or debt consolidation?” Feisal said. “Once you select a lender, determine if the refinance makes economic sense.