Mortgage refinancing – Consumer Reports


Perhaps the biggest factor behind the lack of refinancing has been the Covid-19 pandemic, which has hit black and Latino communities much harder than other groups.

‘COVID was nasty – a lot of people got laid off,’ says Rev. Dr Charles Butler, who helps run a New York-based nonprofit that offers housing counseling and other empowerment programs from the community.

“It’s hard to refinance,” Butler explains, “because banks want to see the same things when the borrower got the mortgage approved in the first place: consistent employment, tax returns, credit and all the rest. things. If some of that is missing, the refinancing opportunity will simply not be available. “

For example, if a homeowner misses a single mortgage payment, they may not be eligible for refinancing until they make 12 consecutive payments on time, Butler explains. But even homeowners with mortgages in good standing – and without a job disruption – could be turned down if their income has fallen below what the bank considers too risky, he says.

There is also a lingering distrust of the banking industry – and the refi industry in particular – among members of the Black and Latino communities.

“A lot of times you will see unscrupulous lenders show up, knock on their door and say, ‘We’re going to refinance and fix your porch or your windows’, when in reality, these are predatory loans looking to steal their capital. own, or their home and their equity, ”says Butler.

Many blacks and Latinos are also still reeling from the 2008-9 mortgage collapse, which hit these communities at a higher rate than others.

“It’s so complicated when you don’t have the right resources and you don’t already trust the banks, especially after the economic crash of 08,” says Naomi, who remembers how her family was devastated when the market real estate has collapsed.

“I was pretty young and we were living in Southern California at the time,” she says. “We had to leave home and move to Texas and go from there.”

Years later, they returned to California, and armed with good credit and a good job, Naomi says she was able to help her family buy a new home.

But even Naomi was reluctant to refinance. Among other reasons, she had heard that buying a refi could have a negative impact on her credit rating.

“Getting refinance quotes involves rigorous credit checks, so there’s no way to ‘shop around’ without affecting my credit,” says Naomi.

This concern is shared by many other members of Black and Latino communities, who tend to have lower credit scores than the general population.

There are, however, ways to overcome these obstacles and, like Naomi, save thousands of dollars a year. Here are some key strategies to help you.


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