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Monday, November 27 2017

HOME LOANS BELLEVUE WASHINGTON

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Zach Shelly can help repair your bad credit.

 17 years of experience helping clients affordably repair their bad credit, Zach Shelly has the resorces & has the knowledge, and tools to help you on your path to financial health. We know the laws, the road blocks, and the process. We put our experience to work for our clients. We have the reliable conections to assult any situation. Call Zach Shelly for advice today. Bellevue Mortgage Broker.

   

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MORTGAGE BROKER BELLEVUE TIPS FOR NOT GETTING SCAMMED

1 – Assuming the big banks have your best interest

It's amazing how many borrowers simply go straight to their regular bank when they need a home loan or a refinance. Or how many simply check a few advertised rates and pick the lender offering the lowest one. Or who assume they have to refinance with their current lender.

When shopping for a mortgage refinance, it pays to check out the competition – big time. A difference of a mere one-eighth or one-quarter of a percentage point on your mortgage rate can mean a savings tens of thousands of dollars over the life of your loan.

Mortgage pricing can also be complicated, with many factors affecting the actual cost, so it pays to look carefully into rates, terms and fees offered by different lenders. Take your time and find your best deal.

2- Fixating on the mortgage rate

One of the biggest mistakes borrowers make is focusing solely on the interest rate when comparing Seattle mortgage lenders A lot of factors go into mortgage pricing and a low refinance rate from one lender can actually cost more than a higher rate from someone else – a lot higher.

Closing costs can vary widely from lender to lender, and a seemingly low rate is sometimes used to disguise a loan with unusually high fees. Often, advertised rates are based on the borrower paying for discount points, a way of buying a lower rate.

Be sure to inquire about such things as the loan origination fees, points, credit reports and all other fees before applying for the loan. These aren't finalized until you receive your Good Faith Estimate once you apply, but any major changes at that point are a red flag that something's amiss.



3 - Not saving enough

If you only get a small reduction in your interest rate, say half a percentage point, it's going to take you a long time to recover your closing costs. This is what's known as the break-even point – how long it takes your savings from refinancing to exceed what you paid to refinance. 

For example, if you paid $5,000 in closing costs and you saved $100 a month by refinancing, your break-even point is 50 months – just over four years. But if you save only $50 a month, it will take you eight years to break even – and you might have sold the home and moved by then.

Most experts say you need to knock at least three-quarters or a full percent off your current rate to make refinancing worthwhile. High-end homes can justify a smaller rate reduction than more modestly priced ones, because the savings are much greater. A small reduction can also be worthwhile if you plan to stay in the home a long time.

4 - Trying to time mortgage rates

When interest rates are low, borrowers may watch daily changes in refinance rates, trying to jump in at the spot when rates are at their absolute lowest. But they often miss the boat completely and see rates go shooting back up again.

Timing mortgage interest rate is like trying to time the stock market - it's difficult even for savvy professionals. Look at it this way - rates are still lower than they've been for most of the past half century - getting greedy over fractions of a percent could translate to a lost opportunity.

5- Refinancing too often

With interest rates near record lows, many people who've already refinanced their mortgage are rushing to do so again, to lock in the lowest rate possible. While that's an attractive proposition, it's one that can lead you into trouble if you're not careful.

The problem is that refinancing costs money. To refinance a mortgage, you'll typically pay about 3-6 percent of the loan balance in closing costs, perhaps less on high-balance loans. So for refinancing to make sense, you need to save enough in interest to eventually cover the closing costs.

Some homeowners, in chasing ever-lower rates, make the mistake of refinancing too often. They pile up closing costs over time, so their loan balance keeps increasing - negating the benefits of refinancing in the first place.

6 - Not reviewing the Good Faith Estimate and other documents

The Good Faith Estimate is a breakdown of the total cost of the mortgage, including the APR (interest rate) and all fees. Look it over carefully and make sure it matches up with what you were told before you applied - if there's a significant difference, consider looking elsewhere. Also, check over your final documents at closing to ensure they match the Good Faith Estimate, especially when it comes to fees - some unscrupulous lenders will try to tack on various nickel and dime fees at this point to generate extra income on the loan.

refinancing_Seattle_Mortgage_broker, Zach Shelly

7- Cashing out too much home equity

Many people use a mortgage refinance as an opportunity to borrow against their home equity, taking out some cash for things like for home repairs, investments or a major purchase. Because the rates are low compared to other types of loans and mortgage interest is usually tax-deductible, it's an attractive way to borrow money.

The problem arises when homeowners take out too much equity that they leave themselves exposed should housing prices fall (as happened dramatically in recent years) or boost their mortgage payments so much that they have almost no margin for error if financial problems arise. Be conservative in taking any money out of your home and be sure to leave yourself a healthy cushion in home equity.

8 – Stretching out your loan

Most homebuyers start out with a 30-year mortgage. By the time they're ready to refinance, they've been paying on it for a number of years. But if they refinance into a new 30-year mortgage, they're starting all over again.

Extending your mortgage like this can significantly reduce your monthly payments. After all, you're spreading out your remaining loan principle over a longer period. But it will likely cost you more in interest charges over the long run, even if you get a lower mortgage rate, because you're amortizing the loan balance over a longer time.

A better approach is to refinance into a new, shorter-term loan that closely matches the time left on your current mortgage. For example, if you've been paying on a 30-year mortgage for 7-8 years, you might refinance into a 20- or even a 15-year loan instead. Because shorter-term mortgages have lower rates, you can often shave several years off your mortgage with little or no increase in your monthly payment.

Extending your loan term can make sense if you're financially stressed and need to reduce monthly expenses, or if you're doing a debt consolidation loan or other type of cash-out refinance that increases the balance on your primary mortgage. Just be aware of the costs of doing so.

9 - Agreeing to prepayment penalties

Though they aren't common, some mortgages will have buried in the fine print a prepayment penalty if you pay off the mortgage ahead of schedule – such as you would do if you sell the home or refinance again. Which you may want to do.

These often expire after a few years and are a common feature of "no-cost" refinances, where the lender waives the closing costs but makes up for it by charging a higher rate. The penalty ensures that lenders still get paid if borrowers sell or refinance before they can recover those costs through the higher rate.

In some cases, a lender will offer a slightly lower rate if the borrower will agree to a prepayment penalty. Borrowers with poor credit may also be required to accept a prepayment penalty in order to get their loan approved.

Aside from those, there's really no reason for a refinance to have a prepayment penalty, particularly one that still applies after more than 3-5 years.

10- Paying junk fees

Just like with any other mortgage, borrowers need to be on the lookout for "junk fees" added on to the regular closing costs. While things like loan origination, application and title fees are unavoidable and legitimate, some lenders will add charges for things like "document preparation" or overcharge for obtaining credit reports or document delivery. The general rule is, if it's something you could do yourself or hire someone to do for less, there's a good chance it's a junk fee.

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To refinance a loan, you take out a new loan, and pay off the old one with it. Obviously, the new loan should offer you improved terms over the old loan. If the old loan involved the use of collateral (assets you own that guaranteed the load), they can also be used for the new loan. Sometimes a borrower will borrow a little extra during refinancing to take some equity out of an asset (known as "cash out" refinancing).

A refinancing may also allow you to change the type of loan you are making, as you may wish to switch from a variable-interest rate loan to a fixed rate of interest.

In a refinancing it's important to take all the extras into account. There are often fees and charges that may make the refinancing not worthwhile. You should carefully compare the refinancing with your previous loan, looking at the full set of costs. A prepayment penalty on some loans, particularly car loans, is one to watch out for.

Many people refinance car loans to increase the length of the loan so as to reduce the size of monthly payments. They should realize, of course, that this increases the cost of the loans because more interest is paid – use the calculator to see just how this works.

You may also want to watch out for getting stuck with an "upside down" auto loan – this means a loan in which the car you own isn't worth as much as the loan you are paying off. If you increase the length of your Home loan Bellevue, you should realize that your car will decline in value over the period that you pay off the loan. Late in the loan period, if you try to sell the car, you won't be able to recuperate as much as you owe the lender, and you'll have to spend your own money to pay off the loan.

But, for whatever kind of loan you may have, there may be good reasons to refinance. One is that interest rates may have sharply declined. If you borrowed in a period of high general interest rates, and they've since gotten lower, you might be able to arrange a good deal with a different lender based on the lower rates. Sometimes even the same lender will make such a deal, knowing that if they don't, you'll go elsewhere.

Another reason for refinancing may be that your credit score has improved. This means that you now have access to many better loan deals than you could get previously. You might have corrected errors in your credit scores, or simply gone for a period of caring carefully for your credit so that your scores improved.

When considering a refinancing, shop around. Talk to a variety of lenders, and use the calculator to compare their terms. Remember that, once you've made a refinancing deal, you'll have to live with it for a long time, so make sure you're happy with it.