by Alden Smith
Financial experts tell us that refinancing has been a big source of the trouble in the mortgage market today. Refinancing was an okay option when home values were steadily increasing, but now that we are seeing the trouble in the mortgage market, it is wise to consider all the available options when considering refinancing. With many home owners living in homes that they owe more on than it is worth, the refinancing options are very limited. Here, we discuss refinancing loans, what the options are and what you can do.
Consider Your Options
There are two things that have caused the mortgage collapse – adjustable rate mortgages (ARM) and what financial experts call “serial refinancing.” The obvious answer to a refinance now would be to finance into a fixed rate mortgage to relieve yourself of the pain of an ARM that is about to reset. Common sense would tell us that right now is not a good time for refinancing for a vacation or the boat you have always dreamed of. It might also not be a good time to consider a refi for debt consolidation.
Where To Look
The absolute best place to begin is online. Every major financial site has mortgage calculators that will help you to make the right decision. On the Loan.com website, a sister site of DIY, you can find these calculators for every type of loan imaginable. Loans are listed by state, and you are given many options as far as loan amounts, number of years of the loan, and interest rates to check with their calculators. A check of the site today showed rates that were current at the time of this writing. Using these calculators will give you a good idea of where you stand, what you can afford, and how you will pay for the loan. Phone numbers to relevant lenders are included with the calculations.
Knowing The Details
As in any refinancing situation, you need to be aware of everything involved with the loan. Although legislators are working on a bill to stop shady marketing practices, these standards are not in place yet. First, discuss the loan with a loan officer. Make sure he is up front with any and all questions you may have. Don’t wait until you get to the closing table to get a big surprise. This happens much more than people realize.
Discuss origination fees, points, if any, loan fees and appraisal fees, if any. If the lender makes any attempt to adjust your income to show a higher than actual number, run for the trees. A great deal of the problems today in the market has been from these factors, so don’t allow yourself to be just another number in the long line of foreclosures that we see today.
In Conclusion
Refinancing is not for everyone. In today’s market, prudence should be the watch word for everyone. Check out a prospective lender very carefully, and be sure you know all details before signing on the doted line.
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