Mortgages Other : Refinancing
(This was Written By by Craig Romero, Mortgage Analyst, www.wisemortgageinfo.com)
Should I refinance with my current lender?
With so many homeowners refinancing lately, there are hundreds of refinancing questions being asked. One of the most common is “Should I refinance with my current lender?” The answer is both yes and no.
Your current lender should be the last lender that you obtain a quote from, but you should definitely contact them when you are thinking of refinancing. Get together quotes from other lenders, and then approach your current lender and ask them to meet, or even better, beat those quotes. You can also ask them to waive certain settlement costs and other fees involved since you are already an established customer and your lender may have customer retention programs, but you will need leverage before you do this. That leverage should come in the form of quotes from your lender’s competitors. In fact, your lender may opt to just decrease the interest rate you are currently paying, thereby allowing you to avoid settlement costs altogether.
However, there are drawbacks to using your current lender. Your lender already has your business, once you pay the lock-in fee, they have your money too. Since they already have your mortgage, they have no incentive to close the deal in a timely manner. There are also times when lenders will not quote you the best rate they have, but will quote you a rate that is lower than your current rate. For instance, if you’re at an eight-percent interest rate currently, your lender may offer you 6.5 percent because it’s significantly lower than your current rate. Normally, that would be great, but if rates are at 5.5 percent, your lender isn’t doing you any favors. That is why it is so important to be prepared with quotes from other lenders. It lets you know what rates are available to you, and lets your lender know that you’re not going into the situation blind.
A wise decision is to treat your current lender as you would any other lender. If they do not come in with the lowest rate or best service, take your business elsewhere. While it is nice to do business with a familiar face, you are not obligated to refinance with them, and if you can save money by going elsewhere, you should do so.
Refinance again?
Many homeowners are under the mistaken impression that if they have already refinanced their home, that is it, they can not do it again.
Wrong. Many people can, and do, refinance their homes a second time, sometimes more.
There is a definite increase in the trend of refinancing more than once among homeowners today. It only makes sense that if something saved you money once and can save you money again, you should take advantage of it; and homeowners across the nation seem to be catching on.
More and more people find themselves refinancing a second time. Some homeowners are even refinancing within a few short months of their first refinance process.
When should you refinance a second time? It’s a personal choice and depends on a number of factors, but a safe rule of thumb to follow is to refinance when you can save one to two percent, or more off your current mortgage rate by doing so.
It’s also important to note that when you refinance a second time, you will be able to deduct the points of the entire current loan off of your taxes.
When you're paying the loan off monthly over a period of years, the deductions for points must be taken gradually as well. By refinancing a second time, you get to deduct the points all at once.
The best way to make refinancing a second time affordable to you is to seek out no-cost refinancing options. By doing this, the only costs you will usually incur up front are the appraisal costs, and if you can use the appraisal from the first refinancing, you will save even more money.
The tax savings may even be enough to pay for the costs involved with the refinance. Of course you should consult with a tax advisor to determine exactly how these rules can benefit you.
So when does refinancing a second time not make sense? When there is a prepayment penalty, especially if you have already paid a prepayment penalty with the first refinance. Before refinancing, it is very important for homeowners to check if there is a prepayment penalty policy with their existing mortgage.
In today’s economy it is so important for consumers to save money and tighten the belt in any way they can, and if that means refinancing a second time, they should go for it.
Refinancing Costs
Homeowners looking to refinance are being hit with the option of “no cost” refinancing. It is extremely appealing to homeowners who do not have the cash on hand to pay the costs of conventional refinancing or refinancing through an up front mortgage broker.
But does “no cost” refinancing actually come with no cost to the borrower? Not always. When the big picture is taken into account, some “no cost” refinancing actually has costs that are pretty steep, but well hidden. Most no cost financing options will have you paying ˝ a point to 5/8 of a point more in interest than you would with a full-cost loan.
Homeowners looking to refinance are being hit with the option of “no cost” refinancing. It is extremely appealing to homeowners who do not have the cash on hand to pay the costs of conventional refinancing or refinancing through an up front mortgage broker.
But does “no cost” refinancing actually come with no cost to the borrower? Not always. When the big picture is taken into account, some “no cost” refinancing actually has costs that are pretty steep, but well hidden. Most no cost financing options will have you paying ˝ a point to 5/8 of a point more in interest than you would with a full-cost loan.
Is there ever a good reason to take advantage of a “no cost” refinance? Yes, if the interest rate you are paying now is significantly lower than the current “no cost” refinance rates. You may also want to consider this type of financing if you plan on being in the house for a short period of time, say from one to three years.
If you are not sure how long you are going to be in your home, it is still okay to pursue a no cost loan, and if you wind up staying in the home for a long period of time, you can refinance at a later date.
For borrowers who are considering a no cost refinance because they can not afford the costs to refinance, dig a bit deeper. Many times when you refinance you can roll the costs of your refinance into your loan, enabling you to refinance without a large amount of money up front.
If you do decide to opt for a no cost refinance, make sure that you are truly getting a no cost, and not a hidden cost. With a no cost loan, you will not be paying the lender fees or settlements; the lender pays for these without increasing the cost of your loan. You will however be responsible for per diem interest and escrow costs, though your escrow costs will be credited at closing by your old lender.
Latvian Central Bank Cuts Refinancing Rate to 3.5% (Update2) (Bloomberg) - March 11 (Bloomberg) -- Latvia?s central bank cut its benchmark refinancing rate for the first time this year after rates in the interbank lending market dropped to record lows.
LSCS to save $3.7M by refinancing bonds (The Woodlands Villager) - Lone Star College System trustees hope to save $3.7 million through refinancing bonds.
Loyalsock schools consider refinancing bond (The Williamsport Sun-Gazette) - Loyalsock Township School Board Tuesday night heard discussion about refinancing its 2001 bond, a move that could realize a savings of between $130,000 and $140,000. Les Bear of Robert W. Baird & Co. Inc. explained to the board that the current low interest rates make now a good time to consider refinancing. "You would have to apply to rating companies," he sai.
District to save $136,000 on refinancing of bond (Times News) - The Tamaqua Area School District will save $136,649 through the refinancing of $3.1 million on a series of general obligation bonds.
When refinancing, closing credit card accounts can cost you (Fox News) - When in the midst of a home refinancing and considering an account closure, experts say the price of credit score damage is likely to outweigh the cost of any potential annual fees.
Minersville council backs loan refinancing (The Pottsville Republican & Herald) - MINERSVILLE - The borough council is backing the borough sewer authority in its effort to save the authority and its customers money by refinancing a $2,180,000 loan. The council voted during Tuesday's meeting to pass a resolution approving the loan agre
Golf course refinancing approved (The Oak Ridger) - With little discussion Monday, City Council agreed to essentially refinance the debt on the Centennial Golf Course, potentially saving close to $900,000 and allowing the debt to be paid off two years early.
Banks face costly refinancing (Budapest Business Journal) - Big domestic banks in Greta Britain need to raise as much as ?750 billion in the next three years to support balance sheets and liquidity as the government prepares to wind down support for the sector, analysts said.
DGAP-News: IMMOEAST AG: IMMOEAST AG concludes refinancing of EUR 250 m for three properties in Poland (Financial.de) - Dissemination of a Corporate News, transmitted by DGAP - a company of EquityStory AG. The issuer / publisher is solely responsible for the content of this announcement.
Banks face costly refinancing (Reuters via Yahoo! UK & Ireland News) - Big domestic banks need to raise as much as 750 billion pounds in the next three years to support balance sheets and liquidity as the government prepares to wind down support for the sector, analysts said.
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