7 Things You Need to Know Before Refinancing
If you are going to refinance your home loan, it is important to know the following 7 things.
1.) What your credit score is. It is your right to know your credit scores. Every mortgage specialized will have to see your credit report before he/she can course of action your loan. So if you don’t know your score, ask the mortgage specialized you scarce dealing with to tell you.
2.) Is the new loan going to be have a fixed interest rate or adjustable (ARM)? Rates will vary depending on whether or not the loan is going to have a fixed rate or an adjustable rate. Adjustable rates can and most likely will adjust in 2/3/5 years or any other time frame. Also, your rate will continue to adjust every few months. Usually every 6 months.
3.) What are your closing costs? While most closing costs are rolled into the loan (no out of pocket expense) you nevertheless should know what they are. Ask your mortgage broker for a Good Faith calculate (GFE). You are entitled to this document. So ask for it. It will give you an itemized list of all of the fees involved in your loan.
4.) How much your appraisal is going to cost. Every refinance needs to have an appraisal done. This fee is typically about $300. And it is usually due at the time of the appraisal. You can pay by cash, check, or credit card. But make sure you ask the appraiser how you can pay as some may vary.
5.) Are you going to have pay Private Mortgage Insurance (PMI)? If your LTV (loan to value) ratio is above 80%, then you may have to pay PMI. You should know, that when your LTV drops below 80%, your lender has to drop the PMI. But chances are they won’t do it unless you call them and tell them to.
6.) If you are paying off credit card debt that is in collections, you can get a payoff amount that is much lower than what they claim. You can get at the minimum 20% knocked off without breaking a sweat. If you play a little hardball you can get already lower. I would shoot for getting 35% knocked off the total amount that you owe. Also, tell the creditors that they must remove and negative remarks on your credit as part of the deal. Make sure you get it in writing!!
7.) Work with someone you trust and returns your phone calls and answers any questions. I know this sounds like shared sense. But a lot of mortgage “professionals” out there aren’t specialized at all. You’d be surprised at how many can’t already return a simple phone call.