take a close look at whether refinancing makes sense for you
in your present situation...
some of you out there refinancing your existing second mortgage
can be an excellent financial move, and for others of you,
it simply doesnt make sense. In order to determine if
its right or wrong for you, lets first take a
look at some common reasons why you would do it in the first
In order to combine your first mortgage and second mortgage
into one thereby having one easy mortgage payment
In order to get a better interest rate than the one
youre currently paying
In order to improve your cash flow by paying out other
debts with the refinancing, which in turn will lower your
overall monthly payments
In order to take out equity for other needs (home improvements,
business start up, family emergency, divorce, etc)
youve concluded that it makes financial sense to do
so, then you need to answer the following questions:
How much do you still owe on your home, how much is it worth
(appraisers/realtors can help answer this) and how much equity
does that leave in the property
Whether or not you plan to stay in the home for a significant
period of time.
The type of loan you will be able get and its
The total cost of the refinance, not just the interest
but all of the other costs (legal, appraisals, any payout
penalties on the existing mortgage, etc.)
Your current credit situation (good, bad or ugly)
again, the decision to refinance should be based solely on
your individual situation and needs. Before signing any papers,
you need to own your decision and be both confident and satisfied
with it as you're the one who has to pay for it!
so now that youve decided to proceed, follow along with
me as I walk you through step by-step instructions that will
assist in making the whole process both smoother and easier
One Make Sense Of It
sure that youve done what we discussed previously and
have determined whether or not refinancing is truly in your
best interests financially. Go ahead and run some figures
yourself, there are many online mortgage calculators to help
you with this. Basically you want to ensure that the math
supports your conclusions!
Two Are You Financially Fit?
sure that youre credit is firing on all cylinders. You
do this by pulling your credit report, consider your credit
report your financial report card and if you want decent rates,
then it better be all As & Bs. Any mistakes
and or errors should be disputed immediately. Any negative
information on your report that may be dragging down your
credit score, you need to do everything you can to get it
to the refinance try to save some money up and put it into
your savings account. More than likely there may be closing
costs associated with your refinance and being able to show
the lender you have the ability to cover them may be required
by some lenders. Make sure there are no recent (within last
12 months) NSFs on any of your accounts (checking, loan
payments and mortgages). Most private lenders are not that
bothered by such things, but if youre looking for traditional
refinancing, those lenders will be.
Three Do Your Homework?
out there and find at least three lenders who will offer you
information on how to refinance a second mortgage using their
programs. Call or visit if possible, plus these days a lot
of the information can also be found online or sent over electronically.
Get information in writing on the following, rates, terms,
any and all fees and costs associated with the mortgage. .When
speaking with these lenders let them know your credit situation
up front; there is no pointing hiding this as they will find
out all of this in the end anyway. Plus when youre upfront
with them there is less chances of surprises later in terms
of rates and fees.
Four Comparison Shop
your findings from step three to make comparisons. Choose
the lender and products that best meets your needs and desired
terms. Dont be afraid to ask the lender for better terms,
the most they can do is say no. In the end if youre
not satisfied with any of the loan offers, repeat step three,
do it until youre happy or youve concluded that
this is as good as its going to get. During this process
dont be afraid to ask questions, this is the only shot
youre going to have to do so!
Five If Satisfied, Pass Go & Collect $200...
signing on the dotted line, take time to look over the terms
of your refinance once more, above all make sure that you
will be able to make the required payments and find out exactly
what will happen if you suddenly can't. At this stage you
may also want to consult a professional (lawyer, accountant)
or talk to a relative or friend who has experience with such
matters in order to get a second opinion.
keep one thing in mind here if you're credit is less than
perfect and the interest rate you're being is offered is higher,
don't be surprised if you hear something like "I would
never pay that sort of interest rate". This is fairly
common, they're just looking out for you and offering their
opinion, ultimately in the end what you're being offered is
based on your credit not theirs. If you've shopped around
and this is the best you can get and overall it makes financial
sense to take it plus the terms and conditions are not onerous,
then sign on the dotted line and begin enjoying the benefits
of your refinance.