THINGS YOU SHOULD KNOW ABOUT REFINANCING
Now that Refinancing is popular, it is important for you
to understand that there could be some companies that might
try to take advantage of you. From giving you phony rates
over the telephone to adding ridiculous hidden costs in your
loan, some financial companies will do anything to make money
off of you. Here are some tips to make sure that you get
the most out of your refinance experience:
TIPS
Make sure the company is reputable
Many new companies will try and get a slice of the refinance pie. Lack of experience,
no reputation, and no company history are just a few of the factors that
can contribute towards a bad deal.
What should you do? Ask lots of questions and
make sure you feel comfortable with their level of service.
Make sure you understand every aspect of your refinance process.
Know What Questions to Ask
It takes more than calling a lender and asking "What's your rate?" A
lender could tell you the rates are at an all time low of 5%. But what they
don't tell you is that there are three origination points involved, there are
20% refinance penalties involved, etc. It is your responsibility to ask about
the conditions of the rate, talk about the kind of loan you need, i.e. cash-out,
low-cost refinance, lock period, etc. Did you know that a loan with a lock
period of 15 days is much lower than 60 days? But how many of us are prepared
to go to closing in two weeks? So be careful, and be specific.
Refinance for the right reasons
Don't exchange one debt problem for another. Aggressive debt collectors may
be putting the pressure on you to pay outstanding medical expenses, credit
card debt, etc. You may feel that by refinancing your property and receiving
a "cash out" payment, everything will be ok. Make sure you understand
that "cash out" refinancing might mean that you owe even more debt,
especially if you use your house as collateral to consolidate debt. A higher
mortgage loan balance may mean you need to make a bigger monthly mortgage
payment when you're trying to save money with penalties, charges and fees.
You need to understand that if you fall behind on your mortgage payments,
the lender can take your home in a foreclosure on the mortgage loan.
3 is the magic number
You have a right to change your mind about the refinance process. The law says
you have 3 days to cancel a refinance deal. It is called the right to recision.
So if you feel you have erred, or refinancing isn't for you at this time,
you may opt out by signing a letter with the date and cancellation of the
transaction.
Tax Facts
It is important to understand the tax rules of a refinance, or hire someone
who does. There is tax deductible interest on a mortgage, but it won't count
if you don't itemize. Or, if you refinance twice, there are potential tax
write-offs for the points that haven't been deducted from the life of the
loan that can be written off in a lump sum. There can be lots of tax benefits
for you, but you need to be certain you are complying with current federal
and state tax laws.
"The above information is a general discussion of tax
rules and not intended as a substitute for the professional
advice of attorneys, tax preparers, or others. Your tax treatment
depends on your particular circumstances, therefore, you
should consult a tax advisor or Internal Revenue Service
materials to determine how the rules apply to you."
© 2003 Fannie Mae. All rights
reserved.
GETTING STARTED
If you would like to begin the application process, complete
our online application
or learn more about our current rates with today's
rate sheet.
If you have questions or would like to speak with me, please
give
me a call at 888.691.0151 or drop me an email
at dave@lenderdave.com.
