Home Mortgage Refinancing the Right Way

There are a lot of homeowners who think that a mortgage refinance can be used as some kind of personal financial bailout, in case of emergency. If you count on your home getting you out of a tough financial situation, join the club. Some misconceptions about how a mortgage refinance should be used are widespread and common beliefs a lot of homeowners have. Here are some of the things that a home mortgage refinance should not be used, or considered, or counted on for.

Mortgage Refinancing Is Not An End All Solution To Financial Problems
This is probably the number one idea people get stuck in their heads. Basically, it is commonly believed that a mortgage refinance can be used to end all of your other financial woes. Generally, this homeowner believes that a mortgage refinance has helped them earlier in life and can help them again, and again. While this may hold true for the first, maybe second time, it will get harder and harder to find a lender who will work with you. The lender will see that their is another problem somewhere in your financial planning, that has casued you to be in debt so often, for so much. The rates will increase, the fees will increase, and the more you refinance the more you will put your home in risk of being taken by the bank should you miss a payment.

I can refinance my mortgage should an emergency come up.
Technically, it can be used as an emergency plan, but should not. You should not be getting into emergency financial situations often enough to be even comfortable considering a refinance, let alone execute one. Its bad habit, think of your home as the only thing that will be there forever. It should not just be used at your will to free burden that has been building up. You should act on financial irresponsibility in other ways.

I can refinance for any reason I want.
Again, technically you can refinance your home for any reason you want. However, you should only refinance to save on interest rates, or to shorten the length of an existing mortgage. Both of these reason are good financially sound reasons to refinance. Dont use a refinance to purchase non nesscary items or services. Use it only to better your long term financial position. Do not take it for granted you are putting your home one the line with a home mortgage refinance.

Refinance only if you can get a loan rate 2% or more lower than your current rate. This will save you money every month and ensure you get a good refinancing deal. Do not forget to add closing costs to the total. Often these can be added to the loan, but they should be paid if you can by cash. Shop your quote around to different mortgage lenders and see which terms rates and conditions fit your needs.
http://www.RefinancingCondo.com

Recently, Obama announced his housing stimulus plan which makes over 5 million homeowners instantly eligible for refinancing into a 2% fixed rate. This stimulus package will lower homeowners monthly payments so take advantage now.

Here are some key elements to the proposed Obama housing stimulus plan:

*Help current homeowners who have seen their property or home values decrease by 15% or more with a option to refinance. This helps a lot of homeowners who have seen their property values drop in value in the wake of this mortgage crisis.

*Make loan modification and refinancing a home loan an easier, more beneficial to the borrower, process.

*To keep home mortgage interest rates locked in to a specifice percentage. Ideally a 2% interest rate across the board.

*Provide no assistance or help to market speculators. They ultmiately profit from other peoples downfall and should not be helped.

*Help homeowners who are facing foreclosure or may default on their mortgage by allowing them to more easily refinance their current home loan.

This tough economy is making it harder for good financially responsible home owners and mortgage payers to get that payment in every month in full and on time. Hopefully though by allowing them a chance to refinance at a 2% interest rate, they will lower their costs enough to increase their standard of living, pay off bills, or save. Also, recently millions of people or their spouse have lost their jobs or have had their income reduced, which is adding to the nearly 6 million homes facing foreclosure. Property values in neighborhoods are really struggling, a 2% interest rate would almost instantly raise home values as property values also rise as less homes are foreclosed on and more are bought and sold.

The biggest fear homeowners have when refinancing their home mortgage is being ripped off. Many homeowners are convinced that the best way to avoid being ripped off in a mortgage refinance is to search for the best mortgage rate quotes they can find. One of the best ways to quickly find a good mortgage rate is to use the services of a mortgage broker. However, here is where I want to caution you about the biggest secret in the mortgage refinancing industry. The secret no broker or bankers want you to know.

So, What is this secret that desperately needs to be exposed that can save you thousands?
On a daily basis, homeowners are being ripped off from mortgage brokers, lenders, and banks without even realizing it. How? By being ripped off by the mortgage lender and paying extremely high closing costs compared to what your costs should be or are compared to other homeowners in the same situation.

So what makes these closing costs so high... and why?
Sometimes mortgage lenders or brokers get together with their lawyers and then charge higher fees based on a lawyers time as well. These lawyer fees end up being passed on to you even though the lawyer was not necessary for most or all of the time. This is more of a red flag if the potential lender or broker offered you their service for “free”. When the word free is used to describe closing costs it just means the lender is making money off you in other ways. A lot of unethical mortgage lenders will grab your attention with these free or low cost refinance options. Sometimes, they will even give you cash when you refinance with them because they know the money will be coming back to them eventually. They will always work it so that you are paying more for this “free” or reduced cost closing than you expected. They will stack the deck in their favor.

Who else will be able to use this kind of scam on me?
You need to be cautious of anyone you are dealing with not only your mortgage lender or bank. Your real estate can just as easily perform the same sort of under handed scheming to you. That is why it is very important to do proper research on any potential mortgage lenders or banks. Know your estimated costs up front. Demand every single fee or related cost is estimated and quoted before the closing is set to take place. This way you can review the fees and ask any questions before signing off on the new loan. Mortgage lenders with long histories are often more stable and financially secure than fly by night mortgage companies. Usually the big lenders do not pull these cheap and greedy scams but be aware none the less. Practice patience and find the perfect lender, terms, rates, and conditions for your home mortgage refinance.

-M Petrone
www.RefinancingCondo.com
Taken from: http://www.refinancingcondo.com/2009/02/greedy-secret-of-mortgage-refinance.html