Okay, so you've decided to refinance your house and save
some cash. Before you get too carried away, there are four
important questions you need to know the answer to before
committing to any mortgage broker:
· How long have you been in business?
· How will you get paid?
· Do you have good references?
· How do you handle rate locks?
Let's take a closer look at these, shall we?
How long have you been in business?
You want and deserve a hassle-free loan process, and a good
way to guarantee this is to ensure that your mortgage
broker has been around the block a few times. Not only do
you want your loan to go through without a hitch, you
deserve great results and even better service. If your
mortgage broker has been doing refinance loans for awhile,
he has a leg up on the competition. That way, if there are
any surprises you can rest assured that you'll be in good
hands.
How will you get paid?
It's always a great idea to find out how your mortgage
broker is going to get paid. As much as you'd like to
think he wants to help you because of your rosy
disposition, without some cash from somewhere he probably
won't be able to do much for you. Some brokers will
generate cash in one of two ways: fees or yield spread
premiums. Fees are usually paid by you and yield spread
premiums are paid by... you.
Here's how that works: pretend for a second that you
qualify for a loan with a 6% interest rate. Instead, your
lender puts you in a 7 1/2 percent loan. He keeps the
difference, you pay it, everybody's happy - right?
You have good references?
Ask your mortgage broker for the names and telephone
numbers of the last three refinance mortgage loans he's
pushed through. If you can try to get recent names, you
can give them a call to see if they were happy with the
service your broker provided. It's always nice to check
with others your mortgage broker has worked with to ensure
that calls are returned, promises are kept, and that your
broker is as golden as you think he is.
How do you handle rate locks?
Ask your mortgage broker for a loan commitment letter
because it could be golden to you. That letter spells out
exactly what interest rate you're facing with your
refinance home loan. Here's a general example of what you
could expect to find in a commitment letter.
By getting it in writing you eliminate any confusion over
your interest rate right before closing. In addition, once
in awhile a mortgage broker will try to squeeze a few extra
dollars out of a loan by gambling with your rate lock.
If it's not locked, and interest rates drop before closing
he can wait to lock your rate until they go down. However,
if he gambles and loses you would wind up paying the
difference. A loan commitment letter keeps your broker on
the straight and narrow and keeps your refinance loan on
track at the interest rate you're expecting.
----------------------------------------------------
Darrin Roseborsky is a Refinance Specialist with OMAC
Mortgages, seminar speaker and president of
HomeRefinanceCoach.com. Darrin shows people how to MAXIMIZE
their equity PROPERLY and how to choose options that make
the MOST SENSE for their situation! An example of exactly
how this works, is at: http://www.homerefinancecoach.com
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