Tips on Refinancing

Mortgage and Lending with Gateway Funding

If you’ve been following mortgage refinance rates from the sidelines, it’s not too late to take advantage and slash a few bucks from your payments. There are a few things you should know about interest rates when shopping for your mortgage. Avoid some common mistakes. I have several tips in regard to a refinance. Please read on.

Are the Interest Rates I See… Actually Real? 

Interest rates change all the time. Seriously. Lenders lower their interest rates to win more business or, alternately, raise rates to slow down an overload of applications. You can see this occur with larger banks, but even with local banks when the application volume is heavy. You will then see their publushed rates increase to cut back on volume.

What about these low interest rates?

You will sometimes see advertised interest rates and wonder if it is true. If you see a jaw dropping advertised rate of 2.99 %, lenders typically demand you pay extra fees, called points. Yes you can achieve this low, low rate if you are willing to give up some cash. Sometimes it does makes sense to structure your refinance this way. Each borrower has a different situation and different needs. Your home loan consultant can help.

What about Points - Origination Fees?

Each point is 1% of the loan amount, and a rate far below the average may cost 2 points or even more. It usually doesn't make sense to pay points to refinance unless you plan to be in the house for several years. It generally takes that long to recoup the extra costs. A great home loan consultant can easily run these numbers for you and determine if paying origination fees or points is a sound way to structure your mortgage refinance. Remember that even if the loan terms are the same, origination fees and closing costs can vary by hundreds of dollars. Those differences are accounted for when you compare the annual percentage rates rather than base rates.

Mortgage Refinance Rate Shopping Online

The Internet is an excellent resource for mortgage rate shopping; however, you might be frustrated to find that the quotes you’re receiving are higher than the lowest refinance rates lenders are advertising. This is because the mortgage refinance rates you’ll receive is based on your credit score and loan-to-value ratio; if the rates you’re being quoted are higher than what you’re seeing online the culprit is probably your FICO score. Still one other reason might be the old bait and switch tactic. Some lenders will advertise teaser rates that they never intent to commit to. Since rates change by the minute, some lenders will tell you “ The Market Just Fell Off'. Find a Lender That You Can Trust. You can generally tell if the person that you are talking to really know their stuff. Ask for their credentials. How long have they been originating home loans ? Ask for specific letters of recommendation. Will they guarantee their Services to you ?

If I want to Refinance, but don’t want a 30 year fixed Rate Mortgage

Freddie Mac chief economist Frank Nothaft calls the shift to shorter terms "a very strong trend." In his company's latest quarterly survey of refinancers, more than 1 in 3 borrowers who ditched their 30-year fixed-rate loans opted to replace them with 15-year or 20-year mortgages at near-record low rates. "It can make a lot of sense if you can do it," he said — especially for baby boomers in their 50s who want to be mortgage-free by the time they hit retirement. Obviously you'd need to have the income or financial reserves sufficient to pay the extra money each month. Plus you'd need to be able to qualify for a refi in the first place under today's toughened underwriting standards.

Junk Fees?

One of the most common mortgage mistakes homeowners make when refinancing is focusing only on getting the lowest refinance rates at the expense of fees. Did you know that your closing costs and loan origination fees are negotiable and vary widely from one lender and broker to the next? And what about that mortgage loan origination fee? What’s a reasonable amount to pay the person arranging your mortgage refinance. Inclusion of an Origination Fee are common in some areas, and uncommon in others. For example, my Minnesota loans typically include origination while my Wisconsin loans do not. As for junk fees there are a number of unnecessary closing costs (Lock in Fee ?) that do nothing but drive up your out-of-pocket expenses, making it difficult if not impossible to recoup your closing costs. The purpose of refinancing is to save money right? How good of a deal you’re getting depends on the fees you’re paying and how long it’s going to recoup those fees from your lower payment amount. You can quickly calculate how long it’s going to take to recoup your closing costs by adding up everything you’ll have to pay closing, and dividing by the amount you’ll be saving each month. A great home loan consultant will guide you in this area to make certain that refinancing is in your best interest. You can get a great interest rate and pay low closing costs, but make sure that it is in your best interest to do so. Finding a mix of low interest rates, and an experienced home loan consultant is the building block of success when making the refinance move.

 Please read more on my website at My office is in Winona, MN . Dave Williamson has been a Home Loan Consultant for over 20 years, and works at American Mortgage and Equity Consultants, Inc.

  One of Minnesota's Largest Mortgage Companies

Local Office     577 Huff Street in Winona, MN 55987

Call 507-313-1210

Email me now at

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Comments (7)

Pat Champion
John Roberts Realty - Eustis, FL
Call the "CHAMPION" for all your real estate needs

You have done an excellent job of explaining refinancing I'm sure you have answered a lot of questions. Thanks for the information.

Aug 31, 2011 04:44 AM
Sandy Shores FL Realtor®, Melbourne Real Estate
M & M Realty of Brevard Inc. - Melbourne, FL
Brevard County Real Estate, Florida's Space Coast

Hey Dave, Good info on refinancing. We are seeing alot of people taking advantage of the lower rates today.

Sep 08, 2011 12:41 PM
The Scott Loper Team Bux-Mont Premier Properties
Keller Williams Real Estate - Montgomeryville - Lansdale, PA

Hi Dave,

This is a great "back to basics" article.  Excellent explanation of what consumers can expect.


Sep 08, 2011 02:10 PM
Dave Williamson
Gateway Funding - Winona, MN

Hi Lisa,

Thanks !!


Hey...Great article on Wawa Remebers 9/11. The Photos are very nice. Everyone needs to see this.

Sep 09, 2011 03:19 AM
Emily Allen
ActiveRain - Seattle, WA
Real Estate Blog Trainer

Hey Dave! Great looking blog! Glad to see you are trucking, keep 'em coming!

Sep 09, 2011 05:56 AM
Maria Morton
Platinum Realty - Kansas City, MO
Kansas City Real Estate 816-560-3758

Good points, Dave. Buyers often focus ONLY on the interest rates, not knowing that there are other variables to consider.

Sep 10, 2011 02:45 PM ~ Dallas Real Estate Agent Top Team
Dallas Houses for Rent Dallas Apartment Rentals - Dallas, TX

Dave great blog and your 1st here on A/R congrat's ... most families don't know how to ask questions about refinance !

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Sep 15, 2011 02:38 PM