Refried refi

After years of hearing the slogan “when banks compete, you win!” on radio commercials, I took the bait and filled out the form on Lendingtree.com. That was Saturday morning.

Tuesday morning I got a call from a very enthusiastic senior broker from Heartland Finance who insisted he was the best and assured me he would do anything to get my business. And he certainly proved himself in getting me a great new mortgage–almost. Everything checked out. Lower, fixed interest rate, lower payments, and a generous cash out at closing. It was absolutely beautiful.

There was just one small problem. I live in a manufactured home–a fancy trailer. Now don’t get me wrong. It’s a really nice little house. But legally, it’s very difficult to finance. Sometime after my husband and I bought this place Freddie Mac decided it was not going to buy mortgages for manufactured homes. Freddie Mac is the federal program that ultimately buys all the mortgages. So, if a bank lends out money on a manufactured home, that bank has to keep the mortgage until the homeowner sells or refinances. Banks do not like to hang onto their mortgages. They would rather sell them off so they can have more money to lend to other homeowners. It’s actually rather interesting how money itself can get bought and sold. Let’s say you have a 100,000 dollar mortgage and you’re making monthly payments. Over 30 years, you will end up paying around 200,000 dollars on that 100,000 dollar loan. So you’d think the bank would want to keep your loan around and gradually soak you, the borrower, over the next thirty years. But actually, the bank would rather have the money right now, and to get some cash, the bank will sell your 100,000 dollar mortgage for 85,000 dollars. The buyer of your loan might keep it around for a year or so, then it sells it off for a little less–naturally the price goes down as the principal gets paid down–and so it goes, until Freddie Mac buys it. And I think Freddie Mac mortgages are then sold to individual investors who buy mortgages, or pieces of mortgages, for a guaranteed interest return similar to buying US Savings bonds.

Freddie Mac doesn’t want my mortgage, so the banks don’t either. Now, it’s back to the drawing board. I spoke to another broker, this one from Ark Companies, and he told me the FHA program is one of the few that does finance manufactured homes and that is where I should be looking. Funny, how only a federal program will rescue distressed manufactured home owners from the ravages of the federal program that has made it so much more difficult to be that type of homeowner. But this is the government, after all. If program A causes problems, why, just fund program B to solve them.

All is certainly not lost. I am still getting calls from mortgage companies all over the place who just can’t wait to put their hat in the ring to get my loan. I wonder what they’ll say when I tell them the dirty little secret that my home is a M— home. Maybe what they’ll be competing over is who can hang up the phone the fastest. I’ve refinanced more than once for various reasons and it seems that each time I inquire the business gets more and more cutthroat and desperate. I knew the tendency to outsource to other countries was getting to be a real problem a couple years ago when I started getting phone calls from India and Sri Lanka about refinancing my home. When it comes to something as major as a mortgage, my policy is to deal with people based in the same country. Also, I prefer to deal with the same individual through the entire refinancing process. There are a lot of people in the mortgage business, and they are all trying hard to woo prospective borrowers. So, in that sense you could say it’s a borrower’s market.

So, just because it didn’t work out the first time doesn’t mean I’m taking no for an answer. I’m going to keep inquiring until I either get the new mortgage I want, or decide to make do with the current one for another six months or so. A lot could change by then. Freddie Mac could have a change of heart. The interest rates could drop again. My home could suddenly appraise sky high. Any of those factors could substantially change the game.

Manufactured or not, my house is still a roof over my head and it sure beats renting. Around here rent costs more than mortgage payments. My next house will be stick-built. And I hope to get to the point where I own it free and clear well before retirement age because quite frankly, I’d rather be the one buying someone’s 100,000 dollar mortgage for 85,000 dollars than the one who’s paying 200,000 dollars for it.

But until then, I’m messed up in Colorado, livin’ on a refried refi.