BEST STEPS TO GET REFINANCING

1. Shop around

It is a misconception that refinancing with your current mortgage company is easier because of the history you have with them. Your current mortgage company will require the same documentation as any other mortgage company and they will still need to verify assets, liabilities, employment, etc. Consider many refinancing sources to get the best rates and programs available to you.

2. Calculate a break-even analysis

When refinancing you want to calculate when the total costs of the transaction will be recouped. Determine how much you will save every month and then divide the total cost by the monthly savings to find the number of months it will take you have to break even. Example (this is a simplified calculation for break-even analysis, the calculation is more complex if you are changing from an adjustable rate to a fixed mortgage, or lowering your loan term, and it is advisable to get a professional to assist you): if your new loan saves you $100/ month, and the transaction costs $2500, then 2500/100 = 25 months, this new loan would be beneficial if you planned on staying in your home for at least 25 months.

3. Look at refinancing your first mortgage before getting a second

It is always advisable to refinance your first before getting a second mortgage (unless your first mortgage has certain benefits). Carrying a second mortgage will increase your monthly mortgage payment and have a high interest rate, most people find it convenient to have one mortgage payment rather than two.

4. Consider your overall situation

There are many routes and programs to choose from when refinancing, pick a program that fits your financial situation and your needs.

5. Ask about points and origination fees

Points and/or origination fees are used to lower (buy down) the interest rate. Look at the points, rate, and origination fees. An origination fee is basically the same fee as points, but some lenders separate the two costs to make the fees seem smaller.

6. Get everything in writing

Do not expect verbal agreements to be enforceable, a written contract will override the verbal contract. More importantly, your state may require that contracts for the sale of real property be in writing.

7. Don't sign anything without reading it

Review in advance, whenever possible, any documents you'll be signing. Many of the documents you'll sign are standard forms and are usually available for review (even though specifics of your loan may be unknown early in the transaction). You'll have insufficient time to read all the documents during the closing appointment.

8. Work with the lender in providing documents in a timely manner

Get everything your mortgage company asks for, whenever possible, delays in providing documents can result in costly delays. If your mortgage company asks you for additional documents, provide them immediately, there are ways around not showing documents, but it will increase your costs and rate.

9. Know when to pay for an appraisal

When you think your home value is uncertain or low, ask your mortgage company to prepare a desk review before an appraisal is provided. A desk review will give you a range of the estimated value of your home property. Paying for a full appraisal, when it's doubtful that you'll get the needed value to qualify for a loan, will be money poorly spent.

10. Know your rights

The Equal Credit Opportunity Act (ECOA) provides for equal access to credit regardless of:

There are additional protections if you have a physical or mental disability.

The ECOA also requires that you are notified within 30 days of the completed loan application that your application has been approved as requested, modified, or rejected. Specific reasons for rejection must be given, in writing, to you at the time of rejection or upon your written request for the reasons.

Real Estate Settlement Procedures Act (RESPA) requires lenders to give you advance notice of estimated closing costs in purchase and refinance transactions.

Truth-in-Lending Act
The Truth-in-Lending Act requires all lenders to fully disclose, iwithin three business days after receiving your loan application, a written statement of fees, terms and conditions associated with a loan including the Annual Percentage Rate (APR), which reflects the cost of obtaining credit.

Advertising space