1. Choosing to refinance
with your existing lender without shopping around. Many homeowners
mistakenly believe that it is easier to work with your current
mortgage company, possibly because of the misconception that such
loyalty is rewarded. However, your current lender may not have
the best rates and programs. In fact, in most cases, even if you
have been making payments regularly and on-time to your existing
lender, they will still have to go through verifying your financial
information all over again.
Because most mortgage
loans are sold on the secondary market and are approved independently,
your current lender will likely require the same documentation
as any other company.
2. Not completing
a break-even analysis. How does the cost to refinance compare
to its potential monthly savings? Divide the total refinance cost
by the monthly savings to determine the number of months you will
have to keep the property in order to recoup those costs. Example:
if your refinance costs $2000 and you save $50/month your break-even
is 2000/50 = 40 months. In this case, a refinance is not your
best option if you plan to stay in the house for less than 40
3. Not obtaining
a good faith estimate of closing costs (GFE). All mortgage
companies are required to provide a detailed, written estimate
of closing costs, known as a GFE, within 3 working days of completing
4. Using the county
tax assessorís value of your house. A market value appraisal
is much more accurate and individualized than the value according
to the government tax codes which often do not take into account
improvements or other significant renovations made to the home.
The market value quoted by an appraiser is the value mortgage
companies use to determine whether they will approve the loan.
5. Not providing
documents to your mortgage company in a timely manner. Should
your mortgage company request additional paperwork for any reason,
it is in your best interests to submit as soon as possible. In
order to secure any locked-in interest rate, the loan must fund
before the lock expiration date. Thus anything that could help
expedite the application and approval process is best done in
the most expedient manner.
6. Not getting a
rate lock in writing. Always obtain a written statement detailing
the interest rate, the rate lock time period and details about
the loan program.
7. Getting a second
mortgage before you refinance your first mortgage. Since many
mortgage companies look at the combined loan amounts of a first
and second mortgage, check with your mortgage company if you plan
to refinance your first mortgage to see if obtaining a second
mortgage will cause your refinance application to be denied.
The Personal Loan Consultants at Allegro
Lending Source are trained to take care of all those details
for you, and we will gladly meet with you at your convenience to
discuss your specific refinancing situation. This consultation is
absolutely free, and there will be no obligations or salespeople
hounding you if you decide that it is not the right time for you
Remember that refinancing your home mortgage does not need
to be a tedious, overwhelming task. Call us at (832)476.3498 and
let us show you just how quick and hassle-free creating increased
cash flow through your home mortgage refinance can be!