The interest rates are currently lower than they’ve ever been, and this has many homeowners wondering if they should take advantage by refinancing their existing loan. Given the number of myths surrounding refinancing, the entire process can be confusing and overwhelming. In order to make the decision easier, you need to understand the myths, and the truth about them.
Myth #1 – If you’ve tried to refinance in the past, but were turned down, there is no point in trying again.
The Home Affordable Refinance Program, or HARP, is a program designed to help those who want to refinance, but owe more than the home is actually worth. This program has recently undergone some changes, which increased the number of people who are eligible for the program. Even if you were turned down in the past, you may be eligible now under the more recent guidelines. In fact, if you are current on your payments, haven’t had a late payment within the last six months, and have only had one late payment in the past year, you may be eligible.
Myth #2 – The best time to refinance has passed.
While it is true that the interest rates have increased a bit in recent months, they are still considerably lower than they’ve been in the past. The lower interest rates coupled with programs such as HARP make this a great time to refinance, even with the slight increase in interest rates. In many cases, the increase in interest rates still makes it lower than what you are currently paying. Choosing to refinance now can have a significant impact on the overall cost of your loan, and make those payments easier to manage.
Myth #3 – Refinancing requires lots of cash on hand.
When it comes to refinancing, the amount you’ll need to pay upfront is largely determined by the equity in your home. If you have enough equity, you may not need to pay anything, as the closing costs and fees will likely be rolled into the loan. You will just need to verify this with the lenders you are considering to make sure.
Myth #4 – It takes a minimum of 20% equity in order to be approved for refinancing.
The housing crisis and HARP makes it possible for you to avoid having the 20% equity that was needed in the past. While lenders would prefer that much equity at refinancing, they do help those that don’t have it.
Myth #5 – You’re better off staying with your bank when you refinance your mortgage.
This myth is based on the idea that some banks choose to waive fees for current customers. However, when it comes to mortgages or refinancing, this is usually not the case. You should take the time to shop around with other banks, mortgage brokers, mortgage-only organizations, and online lenders. This will ensure that you find the best rates, and that often means it won’t be your current bank. While you’re comparing, you need to make sure that you verify the fees that you’ll be responsible for to make sure that the lender isn’t tacking fees onto the interest rate. While the current rate is definitely lower, some lenders tack on considerable fees that can make them less affordable overall.
Making the decision to refinance is an important one; especially if it will help you decrease your current payment so that it is more affordable. Your best option is to check with lenders to see if you meet the eligibility requirements, rather than relying on myths such as these. Paying attention to false information can be the difference between struggling to pay your mortgage, and taking advantage of lower rates and programs that could help.
Want to know if now is a good time for you to refinance your home? Let the professional lenders at Ace Mortgage help you with your home loan needs. Call today to talk to our experts, 877-230-5549 or check out our online application (http://www.acemortgagela.com/apply.php).
Sources:
http://www.quickenloans.com/blog/dispelling-the-myths-about-refinancing-your-mortgage