Refinancing:
Avoid The Top Errors Made
Whether you secure a loan with a new
mortgage company or the same lender who
has your current loan, you have to start
all over again. This means that you have
to fill out an application, get your
home appraised, get an updated title
report, and pay closing costs.
Just as you did with your original
mortgage, you need to shop around for
the best rate. Determine what your
finances can handle - a 15 year or 30
year loan.
When many people start out in a home,
they go with an Adjustable Rate
Mortgage (ARM), which most often
changes annually although some change
only every three years. When you look at
refinancing, you should look into
getting a Fixed Rate Mortgage (FRM)
that will lock you into a non-changing
loan. In other words, your payments will
remain the same over the life of the
loan.
Next, find out if your lender will be
charging you any up-front points.
Remember that each point equal to one
percent of the loan amount. If you were
to borrow $100,000, each point would
cost $1,000.
Work with your lender to determine the
amortization so you know exactly what
your monthly payments will be.
If you plan to stay in the house for
sometime, it makes more sense to go with
a lower interest rate and add the point
or points you need to pay on the new
loan. Keep in mind that points on
refinance loans are usually not tax
deductible unless the purpose of the
loan is to pay off improvements made to
the house.
Locking into a 30-year fixed rate at
a lower interest rate has a lot of merit
and is a great consideration.
If you don’t plan to stay in your home
more than three years, and you can lock
into an adjustable rate for less than
6%, it would make more sense to go this
route.
If you’re not sure which way to go, sit
down with several lenders as well as a
financial advisor and have them look
over the figures with you.
There are many different reasons for
refinancing a house. Lower interest
rates are just one of them. Other
reasons might include going through a
divorce, education needs, debt
consolidation (getting credit cards and
other bills paid off).
You’ll
hear it descried as a slow market, or a
buyers market. But it all means the same
thing. That home sales in the local
area, or market are slow. That there are
too many homes for sale and not enough
active buyers.
Sharlet Hakimi Services Clients All Over
the Chicago Suburbs:
Palatine, Rolling Meadows, Arlington
Heights, Barrington, South Barrington,
North Barrington, Barrington Hills,
Inverness, Hoffman Estates, Schaumburg,
Mt. Prospect, Prospect Heights, Buffalo
Grove, Long Grove, Lake Zurich,
Wheeling, Mundelein, Kildeer, Deer Park,
Des Plaines, Elk Grove Village,
Streamwood, Lake Barrington, Park Ridge,
Northfield, Northbrook, Carol Stream,
Wood Dale, Bensenville, Rosemont,
Downers Grove, Lombard, Bartlett,
Hanover Park, Deerfield, Glenview,
Skokie, Glencoe, Winnetka, Evanston
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