An Insider's Guide to Refinancing Your Mortgage: Money-Saving Secrets You Need to Know

224 Pages·2008·0.68 MB·english

by  David Reed

An Insider’s Guide to
Refinancing Your Mortgage:
Money-Saving Secrets You
Need to Know
DAVID REED
AMACOM
An Insider’s Guide to
Refinancing Your Mortgage
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An Insider’s Guide to
Refinancing Your Mortgage
Money-Saving Secrets
You Need to Know
DAVID REED
American Management Association
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Reed,David(CarlDavid),1957–
Aninsider’sguidetorefinancingyourmortgage:money-savingsecretsyouneedto
know/DavidReed.
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ISBN978-0-8144-0935-0
1.Mortgageloans—UnitedStates—Refinancing. I.Title
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2008020999
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Contents
Introduction ix
Chapter 1 What Is a Refinance? 1
RefinancingYourHomeLoan 2
TypesofRefinanceMortgages 11
RescissionPeriod 18
Chapter 2 Why Refinance? 21
WhentoRefinanceintoaDifferentRate 22
RefinancingtheTerm 28
AdjustingtheTermtoFitYourPayment 33
ReasonstoRefinance 35
WhenNottoRefinance 51
TheRefinanceProcessinReview 54
RefinanceLoansandEscrow/ImpoundAccounts 57
Chapter 3 Finding the Best Lender 61
Mortgages:ACommoditiesMarket 61
Who’sWhointheMortgageProcess 64
Banker,Broker,orCorrespondent? 68
WhereNottoLookforaMortgageLender 74
ComparingLoanChoices 77
TheSubprimeNightmare 87
Chapter 4 Finding the Best Loan Officer 91
WhatExactlyIsaLoanOfficer,Anyway? 91
vii
viii CONTENTS
SevenQuestionstoAskYourLoanOfficer 94
LoanOfficerCompensation 98
QualitiesofaGoodLoanOfficer 99
Changing LoanOfficers 102
Chapter 5 Finding the Best Interest Rate 107
SmallChanges,BigChanges 107
WhyInflationKillsEconomies 109
MortgageRatesandEconomicFactors 112
RateShopping 121
RateLocks 127
Chapter 6 How to Save on Closing Costs 139
LenderFees 139
NonlenderFees 140
NegotiatingClosingCosts 145
OriginationChargesandDiscountPoints 152
TheNo-Closing-CostRefinance 153
Chapter 7 Predatory Lending, Loan Fraud,
and Bad Guys 163
WhatIsaPredatory Lender? 163
PrepaymentPenalties 168
BadGuys 170
LoanFraud 173
Epilogue 177
Glossary 179
Appendix:MonthlyPaymentTables 201
Index 207
Introduction
Having been in the mortgage business for nearly two decades,
I’veseenmortgagecompaniescomeandgo.AndI’veseenmort-
gage loan programs come and go along with them.
Technology has made an impact on the mortgage industry.
Mortgage loan approvals used to take several weeks to accom-
plish. Now, it’s only a matter of days. Loans are approved using
automated systems and no longer need human beings making
judgment calls as to the borrower’s creditworthiness.
Since loans are so easy to approve and take very little time to
complete, the entry-level qualifications for loan officers are very
low. Sure, loan officers have to get licensed in the state where
theyplacemortgageloans.Buttrustme,thelicensingprocedure
istypicallynothingmorethantakingarudimentarytestandget-
tingfingerprinted.Therearemoreinexperiencedloanofficersin
this business than ever before, all trying to get a piece of the
‘‘refinance pie.’’
Because of the ease of mortgage approvals, interest rates
don’t have to fall very much in order to make a refinance a rea-
sonableproposition.Andmortgagecompanies,inalltheirglory,
can market themselves silly trying to convince you to refinance
yourloanwiththem.Heck,thereareevenclassesthatloanofficers
cantake tolearnhowto convinceyoutorefinanceyourmortgage.
ix