Refinance Tips • Biweekly Payments • Broker vs Direct Lender • When to Refinance • Home

Refinancing your home

Refinancing your home is a simple yet complicated process. Many of you reading this have probably refinanced more than once in the past few years, if you didn't you did not take advantage of historic low interest rates. If you are in the market for a new mortgage now you should consider asking yourself some questions. You should discuss these questions with your spouse so you are both in agreement going forward with a refi. Here are some questions to ponder in your quest for a new home loan.
1. What are your trying to accomplish with your new loan?
2- How long do you plan on living in your current home?
3- How is your credit rating?   Employment history? How much equity do you have?
4- Are you a recent buyer? Long time home owner? Close to retirement?
5- Do you want cash out? Are you consolidating debt?
6- Are your current mortgage payments hard on you?

Your initial goal should be to determine the purpose for which you are refinancing. You should be honest with yourself and assess your financial situation. How would you like to see your financial picture say, 2, 3 or 10 years from now?

Another fact you should consider is how long you plan on staying in your current house. Someone within 10 years of retirement and a long time home owner will have a vastly different need than someone who is a recent home owner. If you have owned your home for less than 5 years you would be considered a recent home owner.   Statistics show people start looking for a new home at around 7 years so if you have owned your home for 4 years a 30 year fixed payment would not make sense. You most probably will move or refinance in the near future. You can qualify for a lower interest rate in a shorter term loan.

To qualify for the best rate and terms on a home loan you must have 3 important assets, FICO score over 700, good equity plus stable employment and income history. If you lack in any of these you will need expert advise on your best loan options. A good mortgage broker will have access to many loan programs that you would not be able to find on your own.

If you are consolidating debt due to some impulse buying purchases you should look at the whole picture. Most people see the big mortgage payment and think if they can just lower that payment they will get the financial relief. More than likely it's the $600 SUV payment and the credit card payments at high rates that are giving you the financial pressure. You may have to accept a slightly higher mortgage payment to pay off the SUV and the credit cards in order to get the financial relief. If your mortgage payment was $1500 per month and your SUV $600 and your credit cards $300 that is a total of $2400 so if you wipe out the SUV and credit card payments and your new mortgage payment becomes $1700 per month you will save $700 per month! That is $8,400 per year or $42,000 in savings in 5 years!

It is important that you find a good home loan consultant to present options for you in a pressure free manner. If you contact a loan officer who seems more interested in your social security number and personal information before they take the time to find out what your needs and goals are you should pass and find the right person, one who asks you the right questions.   If you want a loan officer with experience you will have to search for one.

If you answer radio advertisments or speak to a telemarketer on the phone you will probably end up talking to an inexperienced (loan officer). I put (loan officer) in parenthesis because most of them don't own a home nor have a real estate license. Most are young inexperienced guys who probably were used car salesmen before. Ask them the tough questions, you interview them. How long have they owned their current home? What is their real estate license number? Ask them how they financed their home? What interest rate they have?   Will they fax you THEIR mortgage statement? It's fair, they will ask your for your most private information so they should be open to you asking for theirs.

Don't make the mistake of finding the right "deal" as all you will accomplish is giving your information to many lenders, having your credit run too many times and possibly not ending up with the right loan program. Look for the right person and the right home loan program will be offered to you.

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