Should I Refinance?

If you’re struggling to answer the question should I refinance, there are several things you’ll want to know before answering this question. You might have heard of the two percent which states you should never refinance unless the best refinance rates are at least two percent lower than what you’re already paying. This is generally considered to be bad advice despite being popular with many financial advisors. Here are several tips before you refi to help you answer the question Should I Refinance for yourself.

Should I Refinance My Home Mortgage Loan?

The internet is an excellent resource for mortgage refinancing; however, when it comes to answering the question Should I Refinance there is a lot of really bad advice out there. Instead of relying on a blanket two percent to base your decision to refinance it makes more sense to test your options on a cost per savings basis. You can do this by figuring out how much mortgage refinancing will cost you and divide this figure by the amount you’re saving each month.

Here’s an example to illustrate how this works. Suppose you’re refinancing your home for $250,000. Your broker quotes you the best refinance rates at 4.5% which is a full point lower than what you had paid at 5.5%. You’re a savvy homeowner so you’re thinking Should I Refinance? According to the two percent rule, you should not; however, you’re smarter than that so let’s look at the numbers.

At 5.5% your monthly payment on a $250,000 30-year, fixed rate mortgage is $1,419. It’s going to cost you about $6,000 for the loan origination fee and closing costs to get you a new payment amount of $1,266 at 4.5 percent. Should I Refinance? Is it worth it paying $6,000 to save $153 a month? It will take you 40 months to recoup your expenses and break even before realizing any benefit from your mortgage refi. That’s just over three years. The average homeowner refinances once every four years so whether you should in this case really depends on you.

Beware Lender & Broker Junk Fees

You can speed up the process of recouping your expenses by avoiding unnecessary fees, especially from your loan originator (broker). One of the telltale signs that you’re dealing with a shady mortgage broker is the rate lock fee. Any broker that quotes you a fee for locking your mortgage refinance rate is just plain dishonest. Other junk fees include application fees, processing fees, and courier fees. One of the most common mortgage mistakes is neglecting to negotiate fees and closing costs when refinancing. You can latterly save hundreds, if not thousands of dollars with good old-fashioned haggling.

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You can learn more about answering the question Should I Refinance without paying unnecessary fees by checking out my free underground mortgage videos.

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Here’s a quick sample to help you answer the question “Should I Refinance?” today.

Cash In Mortgage Refinancing Revisited

There’s a lot of talk in the market place about cash-in mortgage refinance loans. If you’re unfamiliar with this option and are struggling to refinance because you’re underwater in your home loan, cash-in refinancing could be your answer. This isn’t for everyone as it can be quite expensive depending how underwater you are in your mortgage loan. Here are some tips before you refi to help you decide if the cash-in refinance option is right for you.

Cash In Mortgage Refinance Definition

No doubt you’re already familiar with cash-out mortgage refinancing, which is simply borrowing against the equity in your home at the same time you refinance. Cash-in refinancing works in a similar way expect you’re paying down a portion of your principle balance as part of the transaction. This works well for homeowners who are underwater in their home loans hand cannot qualify due to unfavorable loan-to-value ratios.

Should You Pay Out Just to Qualify?

Declining home values and our terrible economy have contributed to record numbers of homeowners being underwater in their mortgage loans. (Underwater means you owe the bank more than your home is worth and have no equity) Lenders don’t like taking on properties with negative equity because the risk outweighs any gains from carrying the home loan. Homeowners who are underwater are much more likely to walk away from a property than those who share ownership in their home.

The decision to go forward with this type of mortgage refinance depends on how much you’ll have to pay to qualify, how much the closing costs and loan origination fees will run you, and how long it will take you to recoup these expenses with a lower payment amount. If your budget is in a pinch and you have access the cash to pay down your balance to a favorable loan-to-value ratio, refinancing to a lower monthly payment could give you some much-needed breathing room in your budget.

Using Retirement Accounts to Qualify for Mortgage Refinancing

Some homeowners are raiding their 401k and other retirement accounts to get their hands of the cash to pay down their home loan balances. I’m not here to give you long-term financial advice; however, if you’re in a bad financial situation and are emotionally vested in your home, cracking the piggy bank on your 401k could offer you the means to get out from under negative equity in your home. The downside is your retirement plan will suffer a setback.

Once you’ve decided to go forward with your cash-in mortgage refinance you can cut your out-of-pocket expenses by minimizing your loan origination fees and closing costs. This will allow you to recoup your expenses more quickly and benefit from your new, lower payment amount.

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You can learn more about refinancing without paying unnecessary lender fees and markup by checking out my free Underground Mortgage Refinancing Videos.

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Here’s a quick sample to get you started improving your home loan outlook with a cash-in mortgage refinance today.

What Every Homeowner Should Know About RESPA

If you’re in the market for a mortgage to buy or refinance your existing home loan, there are several things you should know about the Real Estate Settlement Procedures Act (RESPA) to avoid making common mortgage mistakes. Until recently this law did very little to protect homeowners from predatory lenders and did more to help big banks. This year the laws protecting homeowners from mortgage broker abuses were changed; however, banks are still exempt. Here are several things you need to know about RESPA to avoid overpaying for your next home loan when refinancing.

Avoid Common Mortgage Mistakes

Whether you’re searching for the best refinance rates or trying to find the lowest closing costs when purchasing your home, one of the factors that determines how good of a deal you’re getting is the loan origination fee and closing costs. If you’re refinancing your home loan you’ll need to recoup these expenses before realizing any benefit from a lower payment amount. Overpaying the loan origination fee or paying junk fees at closing lengthens the amount of time it takes to recoup your expenses when mortgage refinancing and takes cash out your pocket.

What’s Wrong With RESPA?

The biggest problem with the Real Estate Settlement Procedures Act is that your bank is exempt from the law. If you’re considering bank mortgage rates for your next home loan you should know that in the 1990s the Banking Lobby spent millions of dollars lobbying Congress to be excluded from this important legislation and succeeded. Your bank is exempt from all the protections provided by RESPA and is required only to give you an Annual Percentage Rate based on a fictitious Good Faith Estimate created by the bank’s marketing department. Why would you ever trust something as important as your home loan to a lender that doesn’t have to play by the rules?

RESPA Changes For Mortgage Brokers

In 2011 the rules regarding broker compensation changed for the better. Your broker gets paid for arranging your home loan in one of two ways. The broker can charge you a loan origination fee for the work they do or accept compensation from the lender in exchange for marking up your interest rate. Prior to 2011 brokers could get paid both ways; however, today it’s only one or the other. Many brokers will try to sell you a no fee refinance instead of paying the origination fee and closing costs yourself, telling you it’s better to let the lenders pay the fees for you.

Refinance No Closing Costs

So what’s the problem with these refinance no closing costs offers anyway? The problem is what the lender paying the mortgage origination fee and closing costs does to your payment amount. Here’s an example to illustrate my point. Suppose for instance your mortgage refi is for $225,000. The broker quotes you the best refinance rates at 5 percent; however, if you opt for the no fee refinance offer your interest rate goes to 5.5%. What does this markup do to your monthly payment amount?

If your mortgage refi is for a fixed-rate, 30-year home loan at 5.5 percent your monthly payment will be $1,280. If you had the lenders best refinance rates at 5.0 percent your payment would only be $1,200 per month. That’s a difference of $960 a year you’re paying extra just to cover the origination fee and closing costs. Five short years later you’ll have paid almost $5,000 for just over three grand in fees and ten years this balloons to $9,600.

Beware Mortgage Broker Tricks

Most brokers tell you that the average homeowner only keeps their home loan for four years before mortgage refinancing again. If you do this you’ll be paying these fees all over again plus starting the amortization of your home loan from scratch. Keep in mind that your home is probably the most important purchase you’ll make during your lifetime and this isn’t a car loan we’re talking about…it’s a thirty year home loan. Don’t let a fast talking broker bait you into overpaying for next mortgage refi.

You can learn more about getting the best refinance mortgage for your next home loan without paying junk fees or unwanted markup of your interest rate by checking out my free Underground Mortgage Videos.

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Here’s a quick sample to get you started slashing hundreds of dollars in unnecessary markup and junk fees from your next refi.

How to Refinance a Mortgage

Would you like to know how to refinance a mortgage without paying hidden markup or junk fees? Did you know that 97% of your friends and neighbors are overpaying for their home loans because of hidden markup and lender junk fees? Once you know how to refinance a mortgage taking advantage of the wholesale nature of interest rates, you can avoid unnecessary markup and fees. Here are my best tips on how to refinance a mortgage without paying one cent more than is necessary.

How to Refinance a Mortgage Online

The Internet is a great tool for researching home loan offers and learning how to refinance a mortgage loan; however, the problem with all the quotes you receive online is that they include retail markup intended to create an extra commission for someone. The mortgage fat cats know this extra commission I’m referring to as Yield Spread Premium. Don’t worry if you’ve never heard of this fee, most people haven’t AND according to the HUD Secretary in the United States it’s responsible for homeowners overpaying sixteen billion dollars this year alone.

Learn how to refinance a mortgage with wholesale interest rates and you’ll save as much as $1200 a year for the entire duration of your home loan! Doing this is easier than you think; you don’t have to be a personal finance guru or have a relative in the biz to pull this off, you just have to find the right person to refinance your home loan without all the nonsense brokers pull to pad their commissions at your cost.

Mortgage Refinancing with Wholesale Rates

How to refinance a mortgage without overpaying? The first thing you’ll want to do is avoid paying for Yield Spread Premium. What is this fee lender’s pay for marking up your home loan? Simply put, Mortgage Yield Spread Premium is a fee even the best refinance company pays for locking and closing your home loan with a higher than necessary interest rate. I say this fee is unnecessary because you’re already paying the person arranging your home loan a perfectly reasonable loan origination fee for the work they do on your home loan. Did you know that Yield Spread Premium effectively doubles, even triples the commission they get for a few hours work they put into your mortgage refinancing?

How to Get Wholesale Interest Rates

Want to know how to refinance a mortgage with a wholesale rate? You’ve come to the right place… I already mentioned that instead of comparing loan offers into the wee hours of the morning (which is what your neighbors did and look where that got them) if you want to get wholesale rates you’ll need to find the right person to arrange your next home loan. Who is this person? For reasons that I’ll discuss in a later refinancing article I can tell you that this person does not work for your bank. The ideal person for arranging your mortgage refinancing is a self-employed mortgage broker working in your area. These brokers don’t have the overhead that even the best mortgage refinance companies have and are much more likely to negotiate the kind of deal I’m describing here.

Now that your learning how to refinance a mortgage without hidden markup you can get stated by telling prospective brokers that you understand how Mortgage Yield Spread Premium works and will not accept any home loan that includes the markup. Offer to pay a reasonable free for loan origination (one percent is perfectly reasonable) and you’ll be will on your way to securing a wholesale interest rate.

You can learn how to refinance a mortgage without overpaying one cent in detail by checking out my Underground Mortgage Refinancing Videos.

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Here’s a quick sample to help you find the right person to arrange your next home loan.

When Does It Make Sense to Refinance?

The Internet can be an excellent resource for information when it comes to the question “When does it make sense to refinance;” however, there is a lot of bad advice out there. Bad advice can steer you away from the opportunity to save thousands of dollars or worse yet, cost you thousands of dollars in hidden markup and junk fees. Here is a logical approach to answering the question “When does it make sense to refinance?” with confidence for yourself.

When Does it Make Sense to Refinance?

Ask any financial advisor the question “When does it make sense to refinance” and many will quote you the 2% rule of mortgage refinancing. This particular nugget of bad refinancing advice dates back to the 1980s when most people had double-digit mortgage rates and the costs of taking out new home loans were much higher. Today, with low mortgage rates and affordable fees the two percent mortgage rate no longer holds water when evaluating your refinancing options.

Instead, it makes more sense to evaluate your refinancing options on a cost versus savings basis. You can answer the question when does it make sense to refinance for yourself simply by determining how much it will cost you in origination fees and other closing costs and diving the amount you save each month by your total cost. This assumes that your new mortgage payment will be lower than the old one; however, keep in mind that there are valid reasons for refinancing with a higher mortgage payment, including taking cash back at closing.

Evaluate Your Mortgage Refinancing Options

Here’s an example to illustrate my point and help you answer the question “When does it make sense to refinance?” Suppose you’re refinancing your home for $250,000 and your old mortgage rate was 6.5%. Your old payment on a thirty year, fixed- rate mortgage loan would have been $1,580. You have the opportunity to refinance at 5.5%, which will cost you $5000 in closing costs.

So is this a good idea? It is when the amount of time it takes you to recoup the $5000 is acceptable for you. In this example, your new, lower mortgage payment will be $1,419, which is a savings of $161 per month. Because it’s costing you $5,000 to refinance this home loan it will take you 31 months, ($5000 divided by $161) just over two years to recoup your expenses. If this is an acceptable timeframe for recouping your expenses then you have the answer to the question “When does it make Sense to Refinance?”

You can learn more about answering the question When does it make sense to refinance? by checking out my free Underground Mortgage Refinancing Videos.

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Here’s a quick sample that exposes why your neighbors are all paying too much for their home mortgage loans.