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Refinance a Loan |
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Refinancing a home loan simply
means paying off your current mortgage by obtaining a new
one. People refinance for many reasons including lower
monthly payments, modifications to the term of their loan or cash out to consolidate other debt.
Many options are available in today's marketplace for
refinancing including fixed rate, interest only loans,
adjustable rates & more. |
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Why
Refinance ... |
| People refinance for a number of reasons
including lower payments, debt consolidation
or even simply cash for a life event (such as college tuition,
wedding or medical expenses). Refinancing is much less complicated than buying
a home. The fact is we can not say if
refinancing is right for your unique profile but
we can help provide you with some questions to
consider asking any potential lender before applying for your next home
loan. |
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DO NOT Make
the Decision to Refinance
More Difficult than it has to be. |
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You already own a
home so (odds are) you have already applied for
a mortgage loan in the past. When you
consider refinancing the notion of having to
search through interest rates, points
and annual percentage rates (APR's) can be
daunting at first but relax. Moving day is
not coming so this is not like when you
purchased your home. You now have the time
to search and compare all your home loan options
without worrying about pleasing anybody but
yourself. (No buyers, NO real estate
agents, NO closing attorneys - this is your
show). It all boils down to simply
choosing the interest rate and monthly payment
that fits your needs and lifestyle. |
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DO Consider
Paying Points. It's Not All Negative. |
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Many consumers automatically rule out paying points
when comparing lenders however you really should re-revaluate this assumption.
A point is equal to one percent of the loan amount. For example, on
a $100,000 loan, one point equals $1,000 which can save you up to 0.375% in rate
over the life of your
loan. Obviously, there is more advantage the longer you plan on
keeping the mortgage but with today's rates more and more people are opting for
longer term fixed rates so points are something really worth considering.
Additionally, Most people may benefit from a tax deduction on all points paid so
it really is something worth considering - Consult your tax advisor for more
details. |
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DO NOT Rely on
Verbal Promises |
Get it in
writing. Every lawyer will tell you this
over and over. Even your mother would
probably stare you down and say "Why didn't you
get it in writing?" Here is a list of the
very minimum things you should get in writing
from any potential mortgage lender before making
an application.
- A
Good Faith Estimate
detailing all your estimated costs
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If you are
locking a rate, the terms of your interest rate
lock including:
The Rate,
Number of days the rate
is locked for,
the date of expiration
and your options to
extend the lock should you need extra time to
close.
- Confirmation of
the program you are discussing
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DO NOT Become
Greedy - Know When to Lock. |
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It's a commonly
known fact in the home loan industry that during
the average life cycle of a mortgage application
(30 days) interest rates rarely change by more
then 0.375%. For the most part rates will
usually bounce around between 0.125 and 0.25% of
the rate you were quoted when you choose your
lender during this time. Many consumers
often feel a rush to watch bond rates and listen
to the Federal Chairman speak automatically
thinking their actions quickly change the
mortgage rate environment. More often than
not, they do change the rates but it's a slow
process and with the exception of the prime rate
(a rate that is more in line with home equity
payments than first mortgages) you will probably
end up chasing the same rate you began with.
Of course, there are many cases where if you had
waited to lock you would have received a better
rate but the same can be said for those who
received a worse rate. Keep your
enthusiasm for the casino in Las Vegas and
understand that it's much better to know your
rate in advance than to be surprised or forced
into a higher rate at closing. Some lenders also
offer a Float
Down Option consumer has an
option to unlock their rate one time during the
initial lock period and float to the current
market. There is a fee but it's on the
broker's side and if rates do drop by a quarter
(0.25%) or more then get on the phone and
request a float down. Not all lenders
offer this (nor are all brokers willing) but it's
very possible with many lenders. |
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Mortgage Calculators. |
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Learn how much you can afford
with our set of mortgage calculators. |
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Calculate
Payments |
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Laws of the Home
Loan Jungle |
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Compare... |
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The best home loan hunters will
compare rates from more than one
lender regardless of past relationships. |
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Be Not Afraid... |
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To say
NO. It's your home,
your money and your jungle. |
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Trust Your Instinct... |
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Enter only on a journey with a
lender you trust. |
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Build the Right Team... |
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Engage only the very
best team of professionals.
Do your research and take the time to make an educated
decision. |
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Enjoy the
Hunt... |
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Above all, enjoy the fact that
this is your hunt and let no one deter you from obtaining
your prey - the best
home loan rate possible! |
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