Dispelling the Myths About Refinancing Your Mortgage - Quicken Loans Zing Blog

Historically low interest rates have had millions of Americans flocking to mortgage companies in search of savings. While rates remain at near-record lows, they’re inching up, and many predict that the escalation will continue. Is it still a good time to refi, or has the time passed? What’s the truth about refinancing in today’s economy? Here are some myths you may have heard, as well as the truths behind them.

Myth: It’s no longer a good time to refinance your mortgage.

While rates have inched up a bit, they’re still historically low. And programs like the Home Affordable Refinance Program, or HARP, mean that now could be the best time in a long time to refinance.

Myth: If you’ve been turned down for a refinance in the past, it’s a waste of time to try again.

The guidelines for HARP have changed. Many folks who were not eligible

for HARP in the past may now be eligible. Home loan experts estimate that there are millions of Americans who still can refinance with HARP.

Myth: You need at least 20% equity in your home to refinance.

In an ideal world, lenders would love for you to have 20% equity in your home. However, HARP was initiated to help homeowners with little or no equity in their homes. Since the housing crisis, mortgage companies will help you refinance with less than 20% equity.

Myth: You’re going to need plenty of cash on hand to refinance.

Not always. As long as you have enough equity, many costs – such as closing costs, application fees, title insurance and appraisals – can be rolled into the loan, making it unnecessary to pay upfront.

Myth: Rates are rates. You should just stick with your big bank for mortgage refinancing.

Some banks waive fees for their regular customers, but don’t bet on it when it comes to a mortgage or a mortgage refinance. Find the best rate by shopping around – check out mortgage brokers, banks, online banks and companies that offer mortgages only. Double check the fees involved before selecting a lender, as some places build fees into the interest rate.

Mortgage rates are on the rise, but they’re still at historical lows. Find out if refinancing your mortgage makes sense for you, and if it does, do it now. Waiting could cost you!

 

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This Post Has 5 Comments

  1. To Whom It May Concern:
    I currently owe 169,000 on my home. My monthly payment is 1,100 and my interest rate 4.0% over 30 years (28yrs) . The estimate value of my home is 220,000.

    1st do I pay closing cost on the loan or are they rolled over into the loan?
    Here are a list my costs. Advertising is not clear on this.
    My goal is to lower the total years to 15, 20 and get a good interest rate, I was quoted at 3.375% over 20 years. Monthly payment 1,400 est.
    My wife and my credit scores are 780 and we have never missed a mortgage payment.

    Loan is 169,000
    ??Cash Out 27,000
    Escrow 2,500
    Cost Loan 3,000
    Total Cost Est 201,000

    I have no control or input into how my rate is calculated. Is what I’m doing good for me????
    Why can’t I get rate at 2.75 or better. Is there any other.
    What would you do????
    I financed 2 years ago at 4.0% over 30 years which was mistake.

    Looking to hear from you,
    Phil Moreno

    1. Hi Phil:

      You do have some control over the rate you’re offered. It’s based on your credit, property type equity, length of the term, etc. That said, there is a point where they don’t go any lower. In terms of whether closing costs are rolled in, that depends upon the loan program you’re using and the way the loan is structured. The bottom line here really is that every situation is different. The best way to have us look into your situation is to contact one of our Home Loan Experts by filling out this form or calling (888) 728-4702.

      Thanks,
      Kevin Graham

    2. Maybe not refinance anything BUT instead pay more towards your principal monthly so that you get on a fast track to payoff, rather then change the terms again and start all over on a new loan with fees you have to pay for that….those fees (extra payment you make monthly) can pay your loan down faster. Same principal of refi only no additional costs and not starting your loan over. Each time you start your loan over the calculations on how much interest goes towards principal changes and you always pay more towards interest in the beginning of the loan period. This is something when people think about refinancing that don’t think about…..

      1. Hi Tressa:

        Everything you’re saying about paying down the principal to pay less interest is true. In fact, we encourage people to pay whatever they feel comfortable with in order to pay as little in interest as possible. My only slight counterpoint is that sometimes by refinancing into a lower rate, it gives people the extra money in their budget every month to put a little more toward their mortgage payment. By lowering the monthly payment, you can put a little more toward principal every month. Just something to think about.

        Thanks,
        Kevin Graham

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