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Discussion in 'Money Talk$' started by SaggyWoman, Nov 15, 2007.
What is usually the process of refinancing?
I am going through that now..
I called a mortage broker that was a friend of mine, he stopped around for the best rate. I also like his company because of several things. One, after you finance through them once, you don't have to ever pay any more closing costs or fees. They make they money from the banks wanting the business.
Also, another reason I like them is if the rates drop, they will alert me to refinance to save me money. They make money from the banks, and I save so it's win/win!
The process is very much similar to buying the house. I filled out an application with him, he stopped around for the best rate, presented me with a good faith estimate and now I am waiting for the appraiser to come by on Monday and then I will sign the paperwork.
The closing costs are rolled into the loan, and the only thing I had to pay for will be the appraiser's fee. If you buy points or do anything non-standard there might be other fees, but I don't know about these.
Are you looking to refinance? As a general rule, I have been told that if you can save 1/4 of a percent then it's worth refiancing. Unless you have prepay penlties or anything like that. Costing cost should be no more than $2500. Mine will be $2100 and my appraiser fee will be $275.
Stay away from adjustable rates or ballon payments. Also, only take an interest only loan if the term is long (10years or more) and you don't plan on being in that house when that term expires. I wouldn't buy points unless you are planning on living in the house to offset the amount you will pay for points vers the amout you will save each month. You have to do the math to know if it's worth buying any points or not.
I'm not sure about conventional, but when our mortgage was FHA, we never paid closing costs, and we refinanced 3 times in one year when the mortgage rates were constantly dropping from around 7 to 5.75
Shop around at different banks until you find one that has no closing costs. They are out there. www.bankrate.com is a good sight to shop for rates, too.
Be careful about shopping around. Everytime your credit report is checked by a lender regarding your wish to obtain credit, you can lose 1-3 points per inquiry. I've seen this make a difference in what type of loan a borrower can qualify for, and in many cases, whether they get one or not. With today's credit tightening, this will only be exacerbated.
Be careful about who advertises what on closing costs. Get a GFE (Good Faith Estimate). Lenders/brokers can legally say they charge so and so closing costs, but there is a section of the GFE called "settlement costs." They can say they charge no closing costs, charge $10,000 in settlement costs, and be legally compliant, and you wouldn't know the difference.
I justed wanted to add to what you said. When looking for a loan, if your lender is shopping around for you, then it won't hurt your score if it's all done within a period of time. I believe that period is 15 days. In other words, if you get 6 inquires on your report all shopping for a mortgage, then it would only count as one inquiry. It a protection put in place to allow you or your mortgage broker to shop around for the best loan.
Also, another way to prevent some of this is to get your own credit report with score. This will help you understand what your score is, and what kind of loan you will be able to get before you start the process.
I use an online service called TrueCredit. For $14.95 you can get all three reports and all three scores (they do differ from each agency). You can keep the service each month to monitor your credit file, or you can cancel without additional costs. I get it for a month and then cancel it. I do this twice per year to monitor my file. You would be surprised at what you will find! I found out once that I had filed for bankrupty and lived in TN!! I had that removed quickly as it was not mine.
I agree with you on the closing costs. Be sure to get a good faith estimate, but know that is only an estimate. In their minds if they get within $1000 they are close enough. That is why I like working with a mortage broker that I know and trust to refinance my home. He will spell out anything I don't understand.
A mortgage broker is the only scenario (if they pull credit once) where your score will only be affected once. If you go to one broker, then another, then another, your score takes three hits. Same is true if you go to 3 banks. 3 hits can happen regardless of the time frame. The rules for this are very vague and while intended to let people shop, the bureaus are notoriously unreliable and can enforce them as they wish, especially since the rules are not explicit.
Remember that a credit report you get will often not have a score that would be similar to what a bank/broker would use in evaluating your application. What you get from the bureaus (like the subscription you have) does give you an idea of what your general credit history looks like. The scores are not necessarily those the bank/broker would use in your evaluation.
While I agree with you that the score I get is different than the actual score, but it's close and for the purpose of seeing what you're starting with it works. I also use it to monitor my credit file.
As far as the first part of your post, I am going to have to disagree. The grace period is set so the comsumer can shop around for a mortage (which is a pretty big purchase) When I financed this house, I had four brokers looking into loans for me, and they all pulled it for several banks before they "found the right one at the right rate" and my score was not affected. The law allows for you to shop around, and it doesn't say you can only use one broker.
As far as the bureaus doing what they may.. That may have been true, and it still may be true for people that don't monitor or know how to deal with problems on their file. Anyone that knows the law, and know how and what to say and the time limits on their response etc, will not have a problem.
The sad part of it all is you are right in that the bureaus will do what they want and most people won't even know or care, or even try to fix it when it could mean a point in that mortage which translate to massive savings.
A free credit report is available at freecreditreport.com. A tidbit- certain loans are not available if you have listed your home on the market within 6 months.
Don't think that is the site for a free credit report. I think that outfit makes you sign up for a monthly service and if you don't quit in time you are stuck paying.
You're absolutely correct. Nothing really "free" about it at all.
Here is the link to the free annual credit report, yours is a paid for site.
I am sorry everyone, I meant to post Jamie's link.
I think those commercials for freecreditreport.com got stuck in my head, because somehow, that is what I typed!