REFINANCING - MYTHS VS. FACTS

There are times in the mortgage industry when the market dictates certain advantages: Whether it's a good time to buy or sell a home for instance. You may have several reasons for wanting to pay off your old loan and secure a new loan through refinancing. Listed below are a few popular myths/misperceptions about refinancing.

MYTHS AND FACTS

• MYTH - Refinancing simply means making a few changes to my mortgage.
• FACT - Refinancing is the process of acquiring a brand new mortgage, and using the
  money to pay off or close your old mortgage.
  
  
• MYTH - When the Federal Reserve cut the rates again, I'll get a super deal.
• FACT - Federal rate cuts don't always mean mortgage rates will be lower. Generally,
  Fed rate reductions are figured into mortgage rates weeks before an anticipated
  rate cut occurs through Treasury yields.
  
  
• MYTH - It's going to cost me too much to refinance.
• FACT - Probably not. Because this is such a competitive environment for refinancing, you
  may be able to convince a mortgage company to waive some of the application,
  appraisal and legal fees, which can run you up to $3,000. Also, work with your
  lender to figure out how much you can save each month. With a good deal, you
  will be able to recover your refinance costs in a couple of years and save
  thousands of dollars in interest over the life of the loan.
  
  
• MYTH - There are always penalties for paying off my loan early.
• FACT - Some states prohibit penalty points for paying off an original loan before amortization. The cost of a refinance depends on the number of points, interest rates and other costs for securing the loan.
  
  
• MYTH - The only time to refinance is if current interest rates drop a full 2% below my rate.
• FACT - As the amount of loans increase, and the cost of refinancing stays relatively stable, a mortgage rate ranging from 3/8 to 1/2 a percentage point may make sense to
  refinance, and save you thousands of dollars. For example, a fixed 30 - year
  $200,000 loan, borrowed at 7% compared to 7.5%, will save more than $24,000 throughout the life of the loan.
  
  
• MYTH - It's ok for me to refinance with less than perfect credit.
• FACT - Although you may be eligible for a refinance due to the amount of equity in your
  home, where you stand with your credit could make a substantial difference in the
  rate you will be offered.

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