Real Estate Law Blog : Staten Island Real Estate Lawyer » refinance mortgage

HOW DO I GET STARTED ON MY REFINANCE

Sdecker — Tue, 05 May 2009 16:20:46 +0000

Call me and let me know your plans. I will ask you to send me a copy of your current mortgage statement to determine your interest rate and principal balance and we will discuss your goals. Depending on your credit and income I will suggest a couple scenarios and different lenders to contact. I will tell you what to ask the lenders so you can obtain a few different GFEs which we will review. These steps are done prior to you selecting the lender to whom you will make your application. If rates are comparable your current lender is the choice because a modification will ordinarily be the cheapest way. A modification can be best but you still should shop around (get GFE) to make sure the rate is in line with other lenders. While it may pay to take a slightly higher rate from your current lender and do a modification to avoid closing costs, we must determine whether the closing cost savings outweighs the additional interest costs. If another lender’s refinance is more cost effective the option of doing an assignment (and CEMA) needs to be explored to save mortgage tax. Finally I usually can point out several items on a GFE that can be waived by a lender and its title company when you understand how to request them.

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WHAT LENDERS LOOK FOR TO REFINANCE YOUR LOAN

Sdecker — Wed, 29 Apr 2009 18:40:14 +0000

I often hear from clients “I pay my mortgage on time, my credit is good, I’m not borrowing any extra money, so all I want is to get a lower rate, why do I have to go through a whole process?”

Unfortunately, even if you are just looking to lower your interest rate and loan payment your loan request must go through the whole underwriting process. Therefore most lenders refinance applications are the same forms as a purchase money mortgage application. A borrower must show (and the lender must verify)

1) Credit Report -that the borrower has good credit,
2) Income – that borrower makes enough money to support the loan,
3) Reserves – some available liquid assets (bank or brokerage accounts) and
4) Collateral- an appraisal is done to document the home’s value to determine loan how much of a loan the lender is willing to make.

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WHAT IS MY GOAL IN REFINANCING

Sdecker — Wed, 29 Apr 2009 18:37:48 +0000

If you don’t know your goal you will never achieve it, is true of most things including refinancing your home. It is advisable for a borrower to discuss his refinancing plans with his attorney or accountant early on. Before starting the process I ask my clients to get me a copy of your current mortgage statement showing their current loan balance and payments. We discuss their plans on how long they intend to live in the home and if any future investment plans (college or home improvement) need to be dealt with. These factors will help determine the optimal term (years to repay) and the loan amount. A thorough understanding of your goals will allow you shop more efficiently as you can tell your lender what type of product most suits your needs. Once we have a handle on these items we can better determine the goals of the refinance so the borrower is ready to start shopping for a mortgage. Remember a lender is selling a financial product and is looking to make money. Mortgage Lenders do not have a fiduciary responsibility to their borrowers which means they do not any obligation to get the borrower the best loan for the borrower. While it is true lenders are not looking to make bad loans that people can’t pay back, the current mortgage foreclosure crisis is a prime example that lenders were thinking more of their short term profits from making mortgages than the long term effects on borrowers faced with a falling real estate market. By calling your attorney before you make an application he will assist you in clarifying your goals, whether you are seeking a lower rate, to take money out or just to get yourself out of an adjustable mortgage.

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WHY REFINANCE MY MORTGAGE

Sdecker — Wed, 29 Apr 2009 18:35:42 +0000

One of the few benefits of the current housing market downturn is that interest rates have fallen to new lows. With interest rates near 5% homeowners with higher rate mortgages can save thousands of dollars by refinancing to a lower rate. While refinancing should save you money it is important to remember that interest rate is not your only consideration. There is also the cost of the bank fees incurred during the refinancing process (closing costs) and in NYS there is a mortgage recording tax which can add several thousand dollars to the cost of your refinance. Prudent owners shop around to before selecting a lender by asking about the rates and closing costs before initiating the refinancing process.

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