Top 10 Success Tips to Refinance your Mortgage

March 23, 2010

Author: William M. Davis

In these days of low interest loans, many individuals are opting to refinance their mortgages. Refinancing of mortgages is done for various reasons. Some individuals refinance their mortgage to get money for renovation, pay off credit card debt, increase their cash flow or buy new assets.

However refinancing is not for everyone. If you only gave a few years left on your mortgage payments or the value of your home have depreciated, refinancing may not be your best option. And a general rule, if you have a large number of years left on your mortgage, then getting a new loan with its benefit will be ok. When seeking to refinance your mortgage, applicants should:

1. Be specific about the loan size:

Being sure of your loan size reduces the time spent with your mortgage broker.This will depend on several factors such as when you plan to sell the house, length of the debt and repayment amounts.

2. Do not rely on advertised rate:

Banks will always advertise the best rate possible for their refinancing. This rate is however reserved from that top 10% who meet all their stipulated requirements. Refinancing rates are established on an individual basis based on your credit score, loan size and whether the loan is closed or floating.

3. Start with your current mortgager:

If you have a good record with your current mortgager, it is best to seek you refinancing from them. They will be more accommodative in order to keep your business. They may also be willing to extend some courtesies such as reduced processing fees due to your loyalty.

4. Be careful when shopping around:

Shopping around is not a bad idea. However, before your give out any information such as your social security number ormake any paymentsensure that the business is legitimate. This can be done by calling the state’s division of banking to investigate the lender’s track record.

5. Avoid “No Cost” refinancing:

No cost refinancing is a trick used by many institutions to syphon money from your pockets. Under no cost refinancing, the fess associated with let us say a 30-year mortgage could be doubled, as these fees are bundled into the overall mortgage. As a result, mortgagers will also be paying interest on these fees.

6. Opt for he reissue rate on you title:

If you are staying with your original mortgager, individuals can ask to be given a reissue rate for their title. This cost is usually 70% less that the cost of issue of a new title. Of course, if you are using a new refinancer, you would not have this option.

7. Recheck your new Title:

Ensure that your new title has all the correct information before it is sent to the courthouse for recording. It is within your rights to request this of your mortgager.

8. Avoid escrowing taxes and Insurance:

Unless you foresee financial difficulties or you are an undisciplined individual, when refinancing never escrow to cover your home insurance or property taxes. This will attract a fee of 1% of the loan amount in states that allow it.

9. Revise closing cost estimates:

If you lock your interest rate, the lender should furnish you with a god faith estimate of your closing cost within three days. Peruse these numbers carefully and compare them with those on your final settlement statement. This gives a good idea of the final closing cost.

10. Allow some time for Closing:

Giving yourself enough time to complete your entire financial requirements can save you a lot of money. A closing time of 30 to 45 days is usually enough to ensure all your contractual obligations are met.