Refinancing Cash is Running Out

• April 2nd 2009

by Mark Wellborn

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Thinking about refinancing your home now that mortgage rates are lower than they have been in decades? The Post is reporting that lenders may not have the cash to help you out.

The money that mortgage bankers borrow to finance home loans (warehouse lines of credit) is apparently drying up which could result in “artificially inflated interest rates and maddening delays in loan closings,” according to The Post.

The lines of credit give bankers the ability to take deposits with the money they need to close a mortgage. They then pay back the credit line when the mortgage is sold.

However, the issue is that the credit supply is dwindling. From The Post:

“The amount of available credit has plummeted to about $25 billion from $200 billion a year ago, according to the mortgage bankers group. Many of the large financial institutions that extend credit to the bankers have left the business, imposed tough restrictions or capped existing lines as they try to shore up their own capital. In the past few weeks, National City Bank, J.P. Morgan Chase and Guaranty Bank have announced plans to end warehouse lending.”

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This article originally published at http://dc.urbanturf.production.logicbrush.com/articles/blog/refinancing_cash_is_running_out/748.