We call hasty mistakes that cost you money, fiscal sins. Re-fi sins are the temptations to avoid re-financing your home.
Because of the latest fiscal and financial news, Palm State Mortgage Company generally approves of your idea to refinance at this time. With most mortgage rates at below 4 percent, it really is a good time to consider refinancing your current home loan. In fact, refinancing your home loan might bring you closer to your ideal living condition than house-hunting and buying a home that is entirely new to you.
However, let’s focus our refinancing steps slowly, lest we fall into one of the 7 Fiscal Sins of Re-financing. There are lots of temptations out there. Advertising can lure us into taking financial actions without our due diligence of serious shopping and pointed questions. Fast and Furious might be the right way to win a street race, but Slow and Cautious might be a better description of the race for a good re-fi situation. This week, let’s focus on the top 4 sins of re-financing, any one of which might tempt you into a bad fiscal situation.
The 7 Deadly Sins of Refinancing without Due Diligence: Our Top 4
Remember, next week we will bring you 3 more Sins to avoid. Thus, you will soon have our Entire Deadly Collection before you refinance your home.
Needless to say, there are a lot of offers “out there,” especially on the Internet. Take the time to research every single thing the offer brings, or as they say-you might be regretting it at your leisure.
Most of the sins below are simple. But Palm State Mortgage Company finds that they are the biggest ones people make. We want you to play it slow and safe so you can gather the graces of the valuable savings solidly available. This brings us to the top sin:
No. 1 Re-fi Sin: Furiously Failing to Do Your basic Homework
Be sure you do your homework before you take any offer from a lender seriously. Some of the basic stuff you need to research includes this handy homework assignment list:
A. Know your state of grace. Financially, this means you must know your credit rating. It is key to the gentle rate you want. Check that credit for free at WisePiggy.com.
B. Find the valuation or worth of your home. Zillow.com or a local realtor can tutor you in this topic. If you don’t know it, you are working in the dark.
C. Take a look at a refinance calculator and you will see a possible new monthly mortgage payment, neatly pre-figured for you.
Here’s an example of the information you can pull up for free at Loan Depot: Lenders, Rate, APR, Monthly Payment, Details.
Armed with that information, visit HSH.com to view advertised mortgage rates from various lenders. Then, use a refinance calculator to estimate your new monthly mortgage payment.
No. 2 Re-Fi Sin: Running up New Credit Card Debt
Now, from the time you are investigating the re-fi loan idea, you need to cut down on large ticket items on those credit cards. Lenders will check your credit now of course,
but they will go back and check it again just before you make your deal.
That new yacht, car and living room furniture on your credit card could lead to rejection. Even worse than using big credit on your current account is the sin of opening a new account. Did you know that every time you open a new credit account, your credit score drops? Lower credit scores translate into higher mortgage rates.
No. 3 Re-Fi Sin: Riding a Re-financing Loan With a Low Credit Score
Palm State Mortgage is just going to tell you that you need to have 660 or better to get a good deal. Forget about it, if you drop lover that 640. You will lose 25 % of the possible lenders. Go, and sin no more with your cards or debts. Pay all your debts on time and work on improving your score so you can re-visit the re-fi idea in a year. Below 600, you will only grab the attention of 2% of the lenders, and your deal is not going to be great.
No. 4 Re-fi Sin: Avoiding shopping for your best rates is the number 4 sin we see most often.
Shame on you if you take a re-fi without shopping the rates! Thou shalt not re-fi without rate shopping!
As brokers, here is where Palm State Mortgage Company shines. We can help you shop lenders you might never even know about. They don’t all toot their horns in splendid Internet Ads you know. Some of them have known us for years, and they might not even include your company.
Running with your current loan company might seem convenient, but it could also be very costly. Convenience might tempt you, but we advise you to shop around for different rates. Going right to your current company for a re-fi is also a sin. You would be simply comparing apples to apples. (And we all know about the apple and sin.) We’ll help you shop for your best rate.
Avoid that Sin of Convenience
It can be convenient to simply refinance with your current lender. But failing to compare rates can be costly over the long run.
Here is the bottom line: Do not assume that your lender will give you a special deal. Instead, compare your lender’s quote with others. And when you are adding everything up, be sure you have noted the rates they charge for making the loan.
The grace of doing your homework is that you can check out different lenders and get all your quotes in writing. So, when you do find a better deal, you’ve got the power to tell your current lender and see if they will adjust their deal accordingly. If they won’t, then adjust your halo, and fly to the company with the better deal. Fiscal heaven is written in lower rates in both financing and fees.