Mortgage Tips, Tricks & Secrets

4 Home Refinancing Tips You BETTER Commit To Memory OR Pay Dearly Like The Rest

No matter what the mortgage market is doing - here are 4 evergreen tips that will put you in control of your home refinancing.

First, I want you to understand something about ME, and what I’m trying to tell you here.

In anything you do in life - there are fundamental principals that apply and your home refinancing is no exception.

I don’t care what the home mortgage refinancing market is doing, if you don’t know the basics you are destined to believe the advertising, sales pitches and cocktail party blabber about how the home refinancing process works.

For example; if you begin with getting the lowest interest rate on your mind - you lose. They got you!

Why? Simply because if the lowest loan refinance interest rate is your only focus, you might as well go into the woods during deer season wearing an authentic deer costume. What do you think your chances of getting shot are?

You’ve heard the real estate mantra of; Location, Location, Location….right!

The home refinancing mantra is: Fundamentals, Fundamentals, Fundamentals!

Here’s the FUNDAMENTALS you absolutely MUST commit to memory when seeking the best mortgage loan rate and ultimately an accurate mortgage quote.

Step 1. Why are you refinancing?

Is it because your neighbor did it and now has a shiny new boat? Or maybe it’s because you were suckered into a bad loan that doesn’t fit your real needs or the current economy (i.e. increasing rates/payments and decreasing home values!).

OR, are you a savvy home owner and when you DO a mortgage refinancing it’s because you are taking out cash and putting it to work for you.

I cover a lot of the topics here about the trading equity for security - but you can read more about it in a book called Missed Fortune.

The idea is to refinance and utilize your homes equity to build your wealth NOT to buy boats and lavish vacations.

If you are doing home refinancing to pull out cash for tax favored investment then you don’t have to abide by the myths that say you should only refinance when you can get a rate lower than you have now. Some even say from 1%-2% lower << it's a total myth if you understand the Missed Fortune concepts. In fact if you do understand Missed Fortune you can refinance at a higher loan mortgage rate and still be at an advantage, seriously. Read the Missed Fortune book and you'll realize that using the mortgage payment calculator OR mortgage loan calculator to determine if you should refinance is a waste of time.

The mortgage interest rate often times has nothing to do with saving at all.

Step 2. No home refinancing should take place until you have the ground work done.

The ground work I speak of is…

2a. Your home value must be established and the appraisal controlled by YOU, not a broker or lender!

2b. Your personal documents must be in order so you can take charge of the loan quote/approval process.

I’ll speak more about the home value and home appraisal process in another section of the website but here is the fundamental rule. Before you do any loan refinancing you’ll want to get your “own” appraisal from a respected home appraiser [you can find one on your own by visiting Appraisers.com, see the resource menu]. Your home value especially limits you from getting into the 2nd mortgage market since an equity loan is contingent on whether your first mortgage is maxed out to the 80% loan to value limit.

You should then collect all of your personal documents and have them ready since most refinance loans are quoted and the approval process hinged on having accurate mortgage finance numbers. The documents you should have ready to fax to your broker/lender are;

- Copy of drivers license (applicable to all borrowers)
- Copy of home owners insurance declaration page
- Copy of asset account(s) showing 6 months of mortgage payments in reserve (401K, Savings, Etc.)
- Copy of last 2 years of W2’s (applicable to all borrowers)
- Copy of the most recent 30 days of pay stubs
- Copy of current mortgage statement, both 1st and 2nd mortgage (i.e. your monthly bill)

Without the above items, your loan quote/approval means nothing.
====== Side Note/Rant ======

I’m still amazed by the number of clients who call a mortgage broker with NONE of the information above and yet still want the lowest loan interest rate quote and/or loan approval available.

Oh sure, you can get a rate quote/approval from just about any broker/lender when searching for your house mortgage refinancing without the above info - simply because the broker “needs” your business and is willing to do what it takes to earn it. However it’s YOUR fault for asking him/her to blatantly lie to you because you have Stupid Home Owner Syndrome.

Stupid Home Owner Syndrome; the act of focusing on the refinance mortgage loan interest rate ONLY, without providing accurate personal information such as income or social security number.

Another amazing thing is that people still call mortgage brokers asking for rate quotes/approvals and won’t give out their social security number.

The client will say; “I have great credit, you don’t need to pull my credit - just give me your best refinance loan rate or I’ll simply call the next mortgage lender who will give me what I want and take my business elsewhere.”

I call it the “Lending Tree” mentality.

You’ve seen the commercials on TV. A husband and wife set in their kitchen interviewing 10 mortgage brokers and sending them on their way when the don’t hear the interest rate or closing costs they wanted.

What do you get when you take an idiot and motivate him? You get a motivated idiot!

When banks compete you win is totally true - however if you’re the typical Stupid Home Owner you get suckered into the dream that you can just ask for the lowest rate and get it. And if you don’t you can take your toys home and play by yourself…right?

You might even be saying “hey, my neighbor did the Lending Tree dance and he made everyone compete for his business and give him the lowest rate available.”

What actually happened was; The Biggest Liar Wins mentality took over.

The mortgage broker is better at the mortgage refinance game than you (believe me). Since he knows you are shopping his rate quote to DEATH with 12 other brokers it’s easy for him to lie through his teeth. NOT because he’s a liar per-say but you were begging him to mislead you on the refinance rate from the beginning since it’s the only thing you knew anything about - it’s called tunnel vision.

You wouldn’t give him any accurate data to work with (such as social security number, income figures, assets, etc.) so to earn your business he figures you’re too dumb to get out of your own way so why not tell you what you want to hear. I’m not calling anyone dumb, but the concept of what you’re trying to do is dumb if you don’t approach this process with a plan.

Your mortgage broker desperately wants to help YOU get one of the best mortgage refinance loans you deserve, so if you approach him with a plan (your home value established and your documents in order, knowing what you want) I’ll guarantee you, YOU will be in control of the mortgage quote/mortgage loan rate process.

====== End Side Note/Rant ======

Step 3. Know what your credit score is, whether you need to have negative credit report items removed and how to do it. I cover all credit and credit repair items in the “Your Credit Score” section of the website.

Step 4. Understanding the Good Faith Estimate is another HUGE part of the home refinancing process and I thoroughly discuss that in other sections of this website - so don’t ignore it.

In conclusion, I’ve given you a massive pill to swallow to cure the Stupid Home Owner Syndrome, but luckily for you the home refinance cure is fast.

I don’t post boring mortgage refinance loan news on this site, or spew out meaningless mortgage definitions that don’t help you like others do. I’m not afraid to give you the insider tips, tricks and secrets to getting this home financing thing figured out once and for all. NO, this has NOT covered each and every loan situation but as I said in the beginning it’s the home refinancing fundamentals that count. Now you have them.

If you have a special refinance mortgage situation you would like to discuss, by all means fill out the comments section below and we’ll go over it in detail. I warn you though if you have a weak stomach for the raw truth don’t bother cause I’m wayyyyy too passionate about this stuff to go easy on you (smile).

Looking forward to hearing from you about your home refinancing and overall refinancing loan experiences.

 

Other Areas You Should Be Interested In:
What’s Your Home Worth
Your Credit Score