Top 10 Refinance lessons for today!
Top 10 thing you may not know about refinancing<br /><br />1. If you are do refi and go to closing and don’t like the numbers because you were mislead you have the right under federal law to walk away from the transaction owing nothing except what you paid direct to the appraiser.<br /><br />2. The appraisal, if you paid for it, belongs to you and can be transferred to another lender regardless of what the appraiser says.<br /><br />3. Points are not deductible BUT you can amortize them over the life of the loan. Say you paid $3000 in points on a 30 year loan, you can deduct 1/30th of the points each year or $100. Here’s the fun part part that not many people know. In this same example you paid off the loan in 5 years because you moved or refied again, then you can take the balance of the points that you have not deducted, the 25/30ths of the points or $2500! Free tax money!<br /><br />4. If you have more than 4 properties, Fannie Mae and Freddie Mac will not let you have more mortgages! They consider you a risk. Yes, because you actually may understand how to manage property and have a lower overall cost of doing business. Genius. Try a local commercial bank or ask your favorite mortgage broker.<br /><br />Be prepared not to be able to get a lot of money from them. They institute harsh lending standards including high debt service coverages and low loan to values. Also, TARP money is better used for preserving bank capital.<br /><br />5. Sloppy up front mean problems later. If the good faith estimate you get is hand written or the application being taken by the person on the other end of the phone is full of mistakes, RUN don’t walk from this person.<br /><br />The entire industry is now getting busy and there are many order takers out there who are not trained and will mess things up.<br /><br />6. With rates at the lowest point in the almost the history of modern banking, why would even think about waiting to lock in?<br /><br />I know that showing off to your friends that you got 4.5% is cool, but would 4.625% hurt you if you are paying 6.5% now? DUH!<br /><br />As the industry becomes busier, the appraisers get busiers, the underwriters become haggered, the title companies start going out of their minds and then you as the consumer starts to suffer and possibly can’t get refinanced in time.<br /><br />7. A HELOC and HOME EQUITY loan are 2nd mortgages. Let me repeat that. A HELOC and HOME EQUITY loan are 2nd mortgages. When you are doing a refinance and you want to keep these loans, there must be what is called a subordination done. That means that the current holder of that 2nd mortgage will have to remain in 2nd position. Therefore, they have to sign a document that gets recorded.<br /><br />The problem may be that they may want to completely re-underwrite your loan and it may take time or their subordination department can’t get the document done in time.<br /><br />Needless to say, it may delay and possible cancel your new loan. Be proactive and find out the bank’s policy!<br /><br />8. Check the license status of not just the company, but the person you are talking to. All the originators in the state of Pennsylvania for example MUST have an originator’s license as of 1/1/2009. If they don’t, then please hang up on them because their company knows they are acting illegally.<br /><br />These people go through background checks, fingerprinting, continuing education, etc in order to make sure that you, the public, will not have issues with your loan. Please respect the fact that people went through this for you.<br /><br />In other states like Colorado, I know from personal experience, you have to get a bond, get Error and Ommissions insurance, take a test, get fingerprinted and perform a skydiving ritual in the Rockies in order to be licensed.<br /><br />9. Don’t let your credit be run over and over again. The more it’s run, the worse it gets.<br /><br />Yes, your credit score is amazingly important in order to see what rate you get.<br /><br />There is a chart we have to follow that shows credit score versus loan to value and a seperate and cumulative chart if you are doing a cash out refinance!<br /><br />Find out once, go to www.annualcreditreport.com This is a site that the government required the 3 credit repositories to establish that lets you find out all about your credit for free. You do have to pay for your scores, but at least you can see if there is anything wrong and correct it.<br /><br />10. Stop making multiple applications!! Go with the company/person you feel most comfortable with. No company/person gets paid until after the loan closes.<br /><br />If multiple people made multiple applications and everyone got processed to the best of the company’s ability, the entire process could not get done.<br /><br />Think the gold rule!