Mortgage and Real Estate Blog

head_left_image

Mortgage Refinancing Mistakes

Minneapolis, MN:  Mortgage interest rates are great, and a lot of people are again running back to their lender to take advantage of these near historic interest rates.

Shopping for a home loan is confusing. Rates, closing costs, no cost loans, and more...  But the less we know, the more we can expect to pay for it.  There are plenty of crafty lenders who depend on your lack of knowledge.  If you are thinking of refinancing, here are three major mistakes we see many homeowners make:

Refinance Mistakes

Mistake #1: Refinancing with your current mortgage company. It seems logical. They already know you pay on time, they already have your loan, so it will be quicker, faster, and cheaper.

Congratulations, you just got screwed!

Your current lender is almost always not the actual lender, but rather just who collects payments for Fannie Mae, Freddie Mac, etc.  There are no special deals or offers, and they pretty much have to do everything all over to give you a new loan.

The know and understand you THINK they are a good place to use.  The know you most likely will never contact anyone else...  Because of this, they are almost NEVER the best choice. 

Another area of concern is that they generally employ only low lever application clerks.  You call asking about a loan, and that is what they give you. Rarely if ever do they actually do a complete review and analysis to see if there is a better loan available.  For example, if you have an existing FHA loan, they may go straight to offering you an FHA streamline refinance.  These are great loans, but your situation may be such that you can now get a better deal on a conventional loan.  Sames goes with a VA loan, and a VA streamline refinance.

A much better move...  Contact the local mortgage broker in your area to get the best deals.

Mistake #2: Getting greedy by holding out for an even better interest rate than you are currently being quoted is a game I see many people lose at because they set unrealistic goals. People tell me things similar to "I will only refinance if the rate gets to 3.50% with no costs". That would be awesome, but it isn't likely to ever happen.  Sometimes I ask them why they are holding out for that?  Why not hold out for 2.50%, or even 2.00%?? That get's them thinking.

A much better move is understanding that refinance rates are currently near the lowest they have ever been.  If you are happy with what you are being quoted today.  Take it, be happy, and never look back!

Mistake #3: Going backwards on your loan by refinancing back to a new 30-year loan.  I just hung up with a nice lady who I help buy her first house some 10-years ago.  She already refinance with me once, and now wants to do it again.  That is great, and she can save some money monthly.  But only a tiny bit of the savings is because of a lower interest rate. The bulk of her savings is because she is going right back to amortizing the payment over 30-years. So if she keeps this new loan, she would have ended up with 40-years of payments!  Yikes.

A much better move would to to look at shortening the term of your loan. Instead of going back to a 30-year loan, look at some of the popular shorter terms, like a 15-year or 20-year loan.  Many people are able to drop into a shorter loan with similar, or just slightly higher payments. Heck, we even offer oddball terms... If you have 22-year left, we can give you a 22-year loan.  No problem!

If your property is in MN, WI, or SD - visit our web site to check current mortgage refinance rates, then use our online mortgage payment calculator to see what a shorter term loan would look like. If you are in another state, check with a local mortgage broker in your area.

You may be surprised, and you will probably have your home paid off before retirement, and saved untold thousands of dollars in interest!  HOW COOL IS THAT??

----------------

Joe Metzler is a Senior Mortgage Loan Officer for Minnesota based Mortgages Unlimited. He was named the 2014 Minnesota Loan Officer of the Year, and provides Home Mortgage Loans in MN, WI, and SD. He can be reached at (651) 552-3681

 

0 commentsJoseph Metzler • January 21 2015 12:28PM
Mortgage Refinancing Mistakes
share
Minneapolis, MN: Mortgage interest rates are great, and a lot of people are again running back to their lender to take advantage of these near historic interest rates Shopping for a home loan is confusing. Rates, closing costs, no cost loans,… more
Student Loans and Getting a Mortgage Loan
share
So you want to buy a home, and have student loan debt? A frequent news item is the level of student loan debt outstanding, and the press claiming that student loan debt is preventing young adults from purchasing homes. Clearly debt can be a… more
Mortgage rates to rise soon??
share
Mortgages rates in the US continue to hover near all time lows. But this doesn't mean they will continue to stay low. Deflation is continuing to spread because of oil prices. These deflationary concerns are the focus of today's Fed meeting, as it… more
MN 2014 Mortgage Loan Officer of the Year
share
Mortgages Unlimited’s Loan Officer Joe Metzler, out of their St. Paul, MN Office, was awarded 2014 Minnesota Mortgage Association’s Loan Officer of the Year. He was presented with the award at the MMA Annual Holiday Event on December 9th, 2014. This… more
6 Responses To Things The Public Hates About Realtors
share
While this was written by an agent out of Texas, it is pretty dead on for Real Estate Agents everywhere. Over the last ten years I've heard the same complaints repeatedly. Over and over again I try and explain to my friends, family, customers and… more
FHA New Loan Limits for 2015 Announced
share
Federal Housing Administration (FHA) Announces 2015 Maximum Loan Limits FHA’s Office of Single Family Housing published Mortgagee Letter 2014-25, which provides FHA’s single family housing loan limits for Title II Forward Mortgages and Home… more
Better than Black Friday Savings??
share
Black Friday Savings?? OK, cool, but why save just a little one day a year? How about potentially saving hundreds every month with a home loan refinance from Mortgages Unlimited? No crowds, no hassle… Apply in your underwear, and sign your… more
Twin City Home Values and Inventory Up
share
The Minneapolis St Paul Twin Cities area real estate market continues to defy the traditional assumptions of supply and demand as year-on-year home prices rise while supply also increases. One reason for this is that short sales and foreclosures… more
Less First Time home buyer? Reality vs Perception
share
First- time home buyers aren’t buying homes like they used to. The share of houses bought by first-time owners is at its lowest level in nearly three decades and down sharply from 2013, according to a survey out Monday from the National… more
Misinformation stopping first time home buyers
share
Lack of knowledge and misinformation may be discouraging Americans from buying a home according to a recent survey sponsored by Wells Fargo &Company. The survey, conducted in June by Ipsos Public Affairs, found that many prospective homebuyers… more