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Refinancing Your Mortgage Debt: Do's and Don'ts

By
Mortgage and Lending with Bank of Utah

Even though interest rates have come up in recent weeks, there are still many borrowers for whom it may still make sens to refinance. Thus, I write this blog post for those that are late to the party but haven't missed the boat entirely. When it comes to refinancing your home there are some things you should and shouldn't do.

Do...

-your "shopping around" on the same day. Mortgage rates can change a few times daily and so if you want a true apples to apples comparison, you should try to get all of your mortgage quotes on the same day and within a few hours if possible.

-ask lenders to give you a quote for a specific rate. This is the easiest way to see which lender has the least expensive closing costs.

-get referrals from friends and family. If your friend of family member had a good experience, it is likely that you will have a good experience as well.


Do NOT...

-refinance if your break even point is greater than 5 years. If your break-even point is greater than 5 years, even if you plan on being in the home longer than that, you would be better off to take the dollar amount of the closing costs and paying down your principal balance.

-trust a loan officer that tells you to float your interest rate. If the numbers add up and the refinance makes sense, your best option is to lock your interest rate and not worry about it. Besides, a good lender will have a free float-down option or renegotiation policy if rates drop significantly.

-refinance a mortgage to pay off student loans or car loans that may have a lower interest rate. Most mortgage terms are 15 to 30 years where student loans and cars are usually much shorter. Unless you need the extra cash flow and you are already being as frugal as possible, it is usually a better idea to leave these other loans alone.

 

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About the Author

John Neil is a loan officer that is passionate about his profession. His goal with every transaction is to make a customer for life. The result is that 95% of his business comes from referrals of satisfied clients. If you need a cache valley mortgage, you can contact John at 435-770-2709. You can also follow him on twitter @LoganUTMortgage or facebook @facebook/MortgageNerd

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Dave Sullivan
Real Estate One - Birmingham, MI
Michigan Realtor with an investor viewpoint

Excellent information I will forward it if that is ok? thank you!!!

Nov 11, 2012 10:14 AM