If you are lucky enough to own a home or condo, and haven't refinanced your mortgage yet, don't worry - there are still great rates out there. But, make sure to keep it simple! I too often come across people who want to refinance and get tripped up by the sales people involved in the process. Here are some key points to keep in mind:
Good luck!
- A simple mortgage will be best. Go with a fixed term (like 30 years), fixed rate (an interest rate that is locked in forever), and pay no points (mortgage brokers confuse people with these). In other words, a 30 year, fixed rate mortgage with no points.
- Don't let the process cause you to borrow more. People usually set out to refinance their existing balance and then end up borrowing even more, at the lower rate. This can wipe out any benefit that you're seeking to gain from the refinance! Hold the line. Borrow only enough to pay off your existing balance.
- Be ware of online lenders. If anyone asks you to pay closing costs or other fees up front, then walk away. You should be able to go through the whole process and pay at the very end, when your refinance is approved and closing. There may be some nonrefundable fees, but these should be a small part of the whole and should be clearly explained to you.
- Work with a small local credit union or local bank branch, with someone that seems like they are taking the time you need in this process. They should be patient and should work with you closely.
- Remember that mortgage people (brokers, orginators, etc.) are paid commission on the size of the mortgage they get you to take. This puts their needs at odds with yours. You're trying to reduce your costs with the lower rate. They are trying to get you to borrow as much as possible. You are the boss. Do what is best for you, and don't worry about them.
Good luck!
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