One of the biggest reasons homeowners refinance their mortgage is to obtain a lower interest rate and lower monthly payments. By refinancing, the borrower pays off their existing mortgage and replaces it with a new one. This can often be accomplished with a no-points no-fees loan program, which essentially means at "no cost" to the borrower.
In the no-points no-fees scenario, the mortgage consultant uses rebate monies paid by the lender to pay off non-recurring closing costs for the borrower. These are "one time" fees such as escrow or attorney fees, title insurance, document preparation, tax service, flood certification, processing and underwriting fees, etc. The borrower is still responsible for recurring fees such as interim insurance, property taxes or insurance policy payments.
Refinancing typically occurs when mortgage interest rates drop significantly, but borrowers with recently improved credit scores (from paying off credit card debt, making mortgage payments on time, etc.) are often candidates for better interest rates as well. If you haven't checked your credit score in a while, it's a good time to call a mortgage consultant.
The question most asked is, "But why should I go back into a 30-year loan?"
There are two schools of thought on this subject, and the mortgage consultant should work hand-in-hand with the borrower's financial planner to determine what works best for their mutual client.
One option is to take the route of the "same payment" refinance, and actually pay off the loan faster and save money on interest fees in the long-run. If refinancing results in a lower monthly payment, the borrower can still continue making the same payment they made in the original loan, and the extra money will be applied to the principal balance.
For example: Let's say you have 25 years remaining in your current loan, and you refinance back to a 30-year loan with a slightly lower interest rate, resulting in a payment reduction of $200 per month. (Note: This is just an example. The actual amount could vary.) You could then take that extra $200 per month and apply it toward the principal on the new loan. At this rate, the loan will be paid off in 22 years and 4 months, which is 2 years and 8 months less than the original loan.
On the other hand, if the borrower's financial planner is a proponent of best-selling author and investment guru Douglas Andrew's philosophies (see Missed Fortune), he or she may suggest investing the extra money in a side-fund that could earn a better rate of return and grow to the amount of the mortgage (and beyond) in even less time. This method provides excellent liquidity, but having more direct access to this money may be too tempting for some homeowners.
Regardless of the reason for the refinance, the mortgage consultant will need to know what the existing loan scenario entails, review the homeowner's long-term goals, and provide a comprehensive spreadsheet that compares and contrasts the various loan programs available.
Bear in mind, refinancing to obtain a lower interest payment could also result in a lower deduction at tax time. The homeowner's mortgage consultant and financial planner should work hand-in-hand with their mutual client's best interest in mind.
To find out if the time is right for your refinance, click here
If you are looking to buy or sell a home, you’ll probably want to not only find the best agent for your needs, but one with integrity and one that knows the ropes. They don’t have to be your best friend, but they should be someone that you genuinely like—because you’ll be spending a lot of time with them.
Start with recommendations from family and friends. Ask what they liked about them. What they didn’t like. And then take it one step further; spend about 30-45 minutes and ask them these questions!
Just a couple of things to keep in mind! Experience is not a guarantee that the person is successful. Ask additional questions if you don’t understand the answers. Ask for references. Make the telephone calls. And before you buy or sell your home, by all means get pre-approved ahead of time.
Most Importantly - If you are a Realtor and don't have the answers to these questions or would like help on designing your presentation for clients; let me know! I would be glad to get you involved in my no cost Realtor Marketing Program.
36 Hours For kids - Children's Hospital and Children's Miracle Network Fundraiser
If you live in the Denver area, you probably already know about this, if not, now you do. You don't have an excuse. Time to act!
On February 16 - February 18th, 2011, the Children's Miracle Network Hospitals will host the 10th annual 36 Hours for kids drive.
Everyone knows and loves children in their lives somewhere. It is time to give thanks and hug the healthy kids in your life. Then help out those are not.
Now imagine this in an environment that has the cutting edge technology that can help make cures. Imagine the kids having FUN while at the hospital. How about red wagons instead of wheelchairs?
It exists!!! The Children's Miracle Network Hospitals are here and growing.
This is your chance to help make this group continue. To help it grow.
You can give a small donation or a big one. Everything makes a difference.
You have found the home that you want to buy. You were able to pick your Realtor. You were able to choose your mortgage lender.
So why can't you pick your own appraiser?
HVCC (Home Valuation Code of Conduct)
This was made active in May, 2009. The idea behind HVCC is to remove any influence on the appraiser to provide a specific value. This allows a property to be appraised for what the current market condition actually is. It is not dependent on the loan amount or by how much cash out a borrower is trying to get.
The hope with this program is that it will help to stabilize the market prices of homes and eliminate more home being "under water" (owing more than what they are worth.
In the past, some appraisers were influenced by a mortgage lender lender to get a certain value to make the loan go the exact way he customer wanted it. Maybe the home was only worth $180,000. The appraiser placed a value of $200,000 to enable the borrower to get all of the cash out that they wanted.
Or a Realtor would have an appraiser place the value a bit higher to get to the contract price, even if a home was not worth it. May be it was only worth $190,000 and the contract was for $215,000. This allowed the home to be sold faster and with less objections.
Whatever the reason, it happened. Now the HVCC is trying to eliminate this from happening. By having the appraiser done by an appraiser that the Realtor and the Loan officer can't speak to, helps to ensure that the value is correct. To make sure it is in the best interest of the borrower.
Kick your bad habit day!
What is your bad habit? We all have a few. Many of us don't even realize we have it until it is pointed out to us. Here is a quick list of the top bad habits out there. See, you are not alone!
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