Get Organized and Do Your Research
You have to ask why you want to do a mortgage
refinance. The biggest factor influencing
your decision is how long do you intend
to stay in your current home. Based on
that reason, you should gather all the
information necessary to do a cost benefit
analysis. This means that the cost savings
from a lower mortgage rate should be higher
than the costs associated with refinancing
your mortgage.
Find Out Costs Of Mortgage Refinancing
It is not enough just to look at the interest
rate of a potentially new mortgage being
offered. There are many fees involved
when refinancing your mortgage. It includes
loan applications, appraisals, home inspection,
attorney fees and prepayment penalties
on your mortgage. To find out what fees
are involved, ask your mortgage provider
for a Good Faith Estimate (GFE). A GFE
is a written estimate of closing costs
involved in getting a mortgage loan.
A good mortgage provider will match or
come close to matching the fees disclosed
in a GFE at closing. You do not want any
surprises when you are closing your mortgage
refinance loan.
Shop Around
Don’t be satisfied with the first
mortgage loan offer, shop around. Ideally,
you should contact three mortgage companies
to get quotes so you can do a comparison.
Besides comparing interest rates, you
will also see what fees the mortgage provider
includes in their GFE. There are various
ways to find a mortgage lender: the internet,
referrals and the financial institution
you are already dealing with.
Beware of Predatory Mortgage Lenders
If it looks to good to be true, it probably
is. They will lure you with low interest
rates, promises of fast cash and low monthly
payments. Other tactics include high pressure
presentations and vague answers. The preferred
targets of predatory lenders are the elderly,
minorities and those with poor credit.
To protect yourself from these
types of mortgage lenders, always ask
the right questions:
1. What is the monthly mortgage payment?
2. How many payments are there?
3. What is the interest rate?
4. Are the payments fixed for the life
of the mortgage loan?
5. Once the payments are done, is my loan
fully repaid?
6. What are the fees I have to pay and
how much?
7. Does it include insurance and taxes?
8. If I pay off my loan early, is there
a penalty
|
