Often times, smaller can mean more personal service, better interest rates and faster loan approvals. But avoid a bank that is too small and looking for more ways to increase revenue at your expense!
With millions of Americans refinancing their homes to take advantage of historically low interest rates, some banks are smelling blood in the water when their customers need to subordinate a second mortgage. What is mortgage subordination? It's when the bank that has your second mortgage and/or line of credit agrees to remain in second position so that you can refinance your first mortgage. Most banks charge an administration fee that ranges from $100 to $250 to approve, process and prepare the subordination agreement. Recently we've come across two local banks that have raised their subordination fee to $500: Vantage Point Bank and Stonebridge Bank. In the case of Vantage Point Bank, the subordination fee jumped from $100 to $500 in a very short period of time. On the business side, banks want to profit from the volume of refinances happening in today's market. On the consumer side, you'd be better off with a bank that has a more consistent track record when it comes to holding the line on customer fees. Even though bank fees tend to increase year after year, it's a little unsettling to see fees increase 500% to take advantage of homeowners in a struggling economy.