What advice would you give someone looking to refinance?
What steps should that person take?
i.e pull their credit, go to local bank, submit info on lending tree, etc.
I look forward to your responses...
Good Answers (3)
Patrick H.
Senior Loan Officer - Let me be your PERSONAL loan expert.
Best Answers in: Personal Real Estate (2), Personal Taxes (1)
Some good advice here. Be careful about Bankrate, Lending Tree etc. These are really nothing more than paid advertising sites and lead generation tools for mortgage professionals. Unless you want the phone riging off the hook at dinner time, don't broadcast your info too freely.
Getting ready to pick a mortgage consists of three steps.
1. Define the Goals for the refi. WHAT are you trying to accomplish? Lower payment? Better rate? Cash out? TIME FRAME? These factors all will have a great impact on the "right" loan for you to accomplish your goals. In this respect, other options BESIDES the good 'ole 30 FRM migh make way more sense. No need to be afraid of an ARM if it provides a better FIT and you are confident it is a stable enough option for your situation. Ditto for IO or other (ahem) "exotic" loan programs. If your guy/gal is unwilling to discuss other options besides a fixed 30, I would question their industry knowledge and experience.
2. Assemble your docs and evaluate yourself. What kind of borrower are you? Collect the following and keep updated. This is the short list of the key docs for most refis.
-Pay stubs for 1 month.
-W2s for 2 years.
-Reserve assets statment (401k is usually easy and works fine)
-Insurance Provider contact info.
-Zillow.com your house to get a ballpark idea of your appraised value.
You might also need to add other docs like: A divorce decree, child support income docs, Soc Sec or disability award letter, letter from you accountant (if self employed), tax returns (pers or business).
Sure it is a good Idea to pull your credit. Make sure there are no bumps and bruises on there that could have a negative impact on your loan. Generally easy to clean up "errors." A good example is a recent client who had a $78 COLLECTION. $78? PAY IT OFF.
3. Shop. Assuming you are well qualified, make a few calls. See who has the best "deal." Ask for the following.
1. A Good Faith Estimate. (GFE). This breaks down all the costs associated with the loan. If you get 5 GFEs, throw away the ones that are way outside the curve and bargain with the rest. They should be very close indeed if they are accurate. Ask the broker to break down the GFE LINE BY LINE for you. Trust me, not too many non-professionals are adept at reading GFEs. Busy document. COMPARE the line items. If one line item is WAY higher or lower than the same line on another GFE - you might want to know WHY. If the agent gives you a song and dance about no GFEs before a credit check etc etc etc. Find another agent. It takes about 2 minutes to generate a vanilla GFE.
2. Any points? Points are expensive and do not always bring you a lot of bang for your buck. This is especially true for financed points (rolled into the loan). Your break even is about 6 years. So if you are not SURE about at least a 10 year time frame, I advise skipping the point EVEN THOUGH THE RATE MAY BE LOWER. There is a very good points v . no points calculator at dinkytown.com (yes seriously - dinkytown).
Point is, lowest rate does NOT always win. Depends largely on the length of time you hold the loan and the initial costs involved.
If the math is close, pick the agent/bank who:
1. Calls your RIGHT BACK.
2. Gives you a fuzzy feeling without blowing smoke.
3. Asks some questions like the ones above before spouting off a rate or immediately asking about an application and a fee. Remember, you want a good mortgage pro who will be a trusted financial advisor, not a convenience store clerk.
Hope this helps. Happy to answer more questions any time..
Cheers!
-P
It may be advisable to seek the help of a fee-only (or fee-based) financial advisor. Selecting a mortgage has far-reaching implications on virtually all areas of your financial well-being, including your monthly cash flow, ability to save / invest, and your tax situation to name a few.
It'll be difficult to get unbiased advice on whether or not you should refi from a mortgage salesperson. There are too many conflicts of interest inherent in that relationship--you want to figure our what is in your best interest and they want / need to sell a loan. How do you know if their recommendation is in your best interest or theirs?
A good fee-only advisor familiar with mortgages and real estate would likely be a good investment. Plus they may have a mortgage professional they trust and can refer you to, if need be.
For more info you can visit the site below and click on "Coaching Services" and then "Liability Coaching."
Links:
More Answers (4)
Sheilah E.
Owner, ★SME Management:.......... Business Management and Accounting Consultant
Best Answers in: Using LinkedIn (892), Professional Networking (39), Staffing and Recruiting (31), Accounting (20), Government Policy (20), Job Search (17), Career Management (16), Ethics (15), Business Development (14), Customer Service (12), Mentoring (12), Education and Schools (11), Organizational Development (10), Computers and Software (10), Personnel Policies (9), Property Law (9), Advertising (9), Small Business (9), Criminal Law (8), Internet Marketing (8), Labor Relations (7), Nonprofit Management (7), Starting Up (6), Blogging (6), Purchasing (5), Government Services (5), Compensation and Benefits (5), Tax Law (5), Lead Generation (5), Change Management (5), Planning (5), Manufacturing (5), Quality Management and Standards (5), Web Development (5), Corporate Law (4), Direct Marketing (4), Public Relations (4), Writing and Editing (4), Corporate Governance (4), Communication and Public Speaking (4), Professional Organizations (4), Software Development (4), Facilities Management (3), Regulation and Compliance (3), Travel Tools (3), Freelancing and Contracting (3), Auditing (3), Venture Capital and Private Equity (3), Economics (3), International Law (3), Internationalization and Localization (3), Treaties, Agreements and Organizations (3), Market Research and Definition (3), Information Security (3), Business Dining and Entertainment (2), Resume Writing (2), Government Contracts (2), Employment and Labor Law (2), Customer Relationship Management (2), Sales Techniques (2), Business Analytics (2), Derivatives Markets (2), Inventory Management (2), Project Management (2), Supply Chain Management (2), Individual Insurance (2), Personal Taxes (2), Personal Real Estate (2), Product Design (2), Pricing (2), Business Plans (2), Energy and Development (2), E-Commerce (2), Enterprise Software (2), Computer Networking (2), Telecommunications (2), Wireless (2), Air Travel (1), Certification and Licenses (1), Occupational Training (1), Conference Planning (1), Budgeting (1), Corporate Debt (1), Corporate Taxes (1), Financial Regulation (1), Risk Management (1), Exporting/Importing (1), Offshoring and Outsourcing (1), Customs, Tariffs and Taxes (1), Contracts (1), Finance and Securities Law (1), Viral Marketing (1), Graphic Design (1), Hedge Funds (1), Nonprofit Fundraising (1), Philanthropy (1), Personal Debt Management (1), Wealth Management (1), Branding (1), Positioning (1), Incorporation (1), Biotech (1), Information Storage (1)
You should talk to the bank first, each has a set of guidelines to follow. It will also depend on the type of refinace and how long you have been in your current loan etc.
Sheilah
Daniel J.
Division Leader with Primerica Financial Services
Best Answers in: Using LinkedIn (1094), Customer Service (26), Professional Networking (16), Education and Schools (11), Business Development (10), Government Policy (9), Ethics (7), Accounting (6), Staffing and Recruiting (5), Property Law (5), Sales Techniques (5), Writing and Editing (5), Starting Up (5), Economics (4), Compensation and Benefits (4), Advertising (4), Project Management (4), Career Management (4), Professional Organizations (4), Web Development (4), Purchasing (3), Job Search (3), Occupational Training (3), Risk Management (3), Personnel Policies (3), Criminal Law (3), Intellectual Property (3), Tax Law (3), Public Relations (3), Bond Markets (3), Nonprofit Management (3), Packaging and Labeling (3), Personal Investing (3), Personal Real Estate (3), Communication and Public Speaking (3), Computers and Software (3), Event Marketing and Promotions (2), Exporting/Importing (2), Internationalization and Localization (2), Contracts (2), Internet Marketing (2), Graphic Design (2), Lead Generation (2), Business Analytics (2), Corporate Governance (2), Planning (2), Equity Markets (2), Quality Management and Standards (2), Personal Debt Management (2), Retirement and Estate Planning (2), Wealth Management (2), E-Commerce (2), Databases (2), Business Insurance (1), Regulation and Compliance (1), Travel Tools (1), Certification and Licenses (1), Freelancing and Contracting (1), Mentoring (1), Budgeting (1), Corporate Debt (1), Venture Capital and Private Equity (1), Government Contracts (1), Government Services (1), Environmental Health (1), Work-life Balance (1), International Law (1), Treaties, Agreements and Organizations (1), Customs, Tariffs and Taxes (1), Antitrust Law (1), Corporate Law (1), Change Management (1), Organizational Development (1), Derivatives Markets (1), Supply Chain Management (1), Individual Insurance (1), Branding (1), Distribution (1), Market Research and Definition (1), Engineering (1), Pricing (1), Professional Books and Resources (1), Small Business (1), Green Business (1), Blogging (1), Computer Networking (1), Information Security (1), Telecommunications (1), Wireless (1)
Be very careful not to get enticed by a great "low rate". Many mortgage lenders will promise low rates without revealing all the costs associated with obtaining that rate. However, they are often unwilling to reveal all the estimated costs until AFTER you have paid several hundred dollars for an application. Even then, you may find out that you don't qualify for the rate you were quoted. Personally I would not pay for an application without understanding all the costs associated with it beforehand.
Our company does not subscribe to this practice. We also do not offer any refinancing other than fixed rate -- no ARMs, interest only, or multiple payment plans, i.e. the kind of mortgages that are causing consumers to wind up in foreclosure. I'm not licensed in RI, but if you are interested I can find someone for you who is.
Speak with someone you trust or a referral from someone you trust. An online source will only get you to a person trying to sell you a mortgage, someone you trust or someone you were referred to will give you advice based on your needs and will help you achieve your financial goals. Banks may have some limited product lines, but if you know the source or trust them they should let you know what is best even it isn't their bank.
Shopping for a mortgage is ok, but you should know what you want before you blast your information across the web. Without knowing what you want no one should advise you on a mortgage product, so be cautious with anyone that gives you a rate and mortgage program without having asked about your goals.
Everyone has the same opinion ~ Lending Tree or any online advertising is simply trying to sell your information to a number of potential lenders. Be very wary.
References are always best.
