3/05/2009

A Bit of Advice on Refinancing


Like a lot of people, I have decided to refinance my home mortgage in the hopes of getting a better interest rate and, conversely, a lower monthly payment. Something I learned Monday, open your mouth and don't be afraid to ask questions. A mortgage broker can be intimidating as they try to force a type of loan on you that you really don't want. When I bought my house, I went with a conventional loan. I was told there would be closing cost of about $8500. I said no way in hell I can pay that. So, I was forced to finance the entire loan. I remember I mentioned to the broker about a VA loan. But, she said there would be letters of eligibility I would need, it is a much slower process and you really want to be in your home now, right? Well, of course, I said I did. I had just gone through a divorce and needed a place to live. So, I bit the bullet and agreed to a conventional loan.

I went to another broker about refinancing Monday and got the same song and dance about how a conventional loan would work out better for me. This time, I asked the broker if there were closing costs to a VA loan. He didn't really give me a direct answer, saying something about possible lender fees, etc. I then asked if there would be a need for mortgage insurance as I am paying now. He said he did not know. I thanked him for his time and left.

I went to a VA mortgage center online and found out what I needed to know. Indeed, there were no closing costs to a VA loan, no need for mortgage insurance since the loan is federally guaranteed. I was also assured of getting the best interest rate with my credit rating (827). Just because the mortgage broker was less than forthcoming does not mean he or she was deliberately misleading me. But, I did not feel comfortable doing business with him. So, if you are a mortgage broker I am not saying you are all bad or misleading. My point here is that you need to do your homework before going in there to conduct business. Make sure you already know the answers to any questions you ask the broker. If they don't give the answers you expect, simply leave. I saved myself about $200.00 a month in my mortgage payment by simply following my own advice above.

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