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Are you qualified for a refinancing?

August 3rd, 2010 11:47 AM by Sam Kader

Rates are at historic low. Thinking about refinancing? There are 2 types of refinancing;
a) Rate-and-Term refinancing and b) Cash-out refinancing. Here are 6 items that you should consider for refinancing: 

  1. Appraised Value. Consider a possibility that your house may worth less than what you think it's worth (not likely if you live in Seattle). Know how much you owe and what the Loan-to-Value is when the appraiser arrives
  2. Obtain conditional approval and lock the rate (30 day lock - cushion for any financing contingency).
  3. Do not start home improvements project prior to appraisal being completed.
  4. Consider shorterning the maturity from 30 year to either 15 or 20 year mortgage. Rates are still attractive. But, payments will go up.
  5. Credit score preferably at 720. Minimum requirement is 620. Check for Dispute Account which can snag the refinancing process.
  6. New rule starting this year - Do not open any new account until the financing process has been completed. Even soft inquiries need to be explained.
Is there such thing as no-closing costs refinancing? Yes and no. A mortgage isn't free. There are fees associated with getting the loan. Those closing costs usually total thousands of dollars. You can pay for it at closing or you can add them to the loan amount. As a result, you do not have to pay anything at closing or "no-closing" costs mortgages. The question whether you should pay or finance the closing costs depend on a few factors: 

1. Do you have funds to pay? If yes then consider question 2 below. 
2. Are you planning to move after 5 years? If yes then consider paying it at closing. 
3. Refinancing break-even calculator. In general, if you could recoup all closing costs in  less than 5 years - you should proceed with refinancing.

You can save your funds for home improvements or other investments. Let me know if I can assist you. 

 

 

Posted by Sam Kader on August 3rd, 2010 11:47 AM

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