8 Mistakes You Cannot Afford To Make When
Refinancing Your Home

Hi Neighbor,

Here is a information packed report that will open your eyes to the truth about some of the biggest mistakes that I have seen over the many years I have been helping regular hardworking folks get a mortgage.  You may even want to print out this information so that you can have it at a moments notice.

After you finish reading this report give me a call at my office at 203-483-0061 and ask for Chris Rivers to set up an appointment to come in and get specific about getting you into the mortgage program and rate you want. Or you can just send me an email to rivers@ctmortgageplanners.com with some basic information and I will get back to you within 24 business hours.

Let's begin.

Mistake #1: Refinancing with your current lender

Your current lender may not have the best rates and programs. As a matter of fact your bank gives a mortgage broker a better rate than they give their own customers due to the volume discount that brokers get for doing the amount of loan volumes.  There is a general misconception that it is easier to work with your current mortgage company. In all cases, your current mortgage company will require the same documentation as other companies. This is because most loans are sold on the secondary market and have to be approved independently. So, even if you have been very good at making payments to your existing lender, they will still have to do their verifications all over again. 

Mistake #2: Not knowing what the total cost of the refinance is

Find out what the total cost of the refinance is, then figure out how much you will save every month. Divide the total cost by the monthly savings to get the number of months you will have to stay in the property to break even on your refinancing costs.

Example: If your refinance costs $3000 and you save $75 per month, your break even point is 40 months. You should refinance if you plan to stay in the house for at least 40 months.

Note: The break even analysis only works if you are refinancing to save money. If you are refinancing to switch from an adjustable to a fixed rate loan or from a 30 year loan to a 15 year loan, it is much more difficult to perform a break even analysis. A break even analysis may not even be a consideration. Here at Chrysalis Funding of Connecticut we will perform a break even analysis at no cost.

Mistake #3: Paying for an appraisal when you think that the house may appraise too low

Every loan officer or mortgage broker has a team of appraisers that can provide estimated home value.  Have the loan officer do a desk review appraisal (typically at no charge) to provide you with a range of possible values. Your mortgage company should be more than happy to ask their appraiser to do this for you. Do not waste your money on a full appraisal if you are doubtful about the value of your house.

Mistakes #4: Using the county tax assessor's value as the market value of your house

You should never use the county tax assessor’s value as any indication of the market value of your home.  All tax assessors separate land value from building value and then they deduct 25% of the value of both.  Additionally, the tax assessor’s office does the valuation model 1-2 years prior to the posting of the assessment valuation.  Mortgage companies do not use the county tax assessor's value to determine whether they will make the loan. Instead, they use a market value appraisal which may be very different from the assessed value.

Mistake #5: Choosing a lender just because they have the lowest rate

While rate is important, you have to look at the overall cost of your loan. This includes looking at the loan fees, as well as the discount and origination points. Some lenders include origination points in their quoted points, while other lenders add an origination point in addition to their quoted points. So when one lender says 2 points they mean 2 points, whereas another lender means 2 points plus 1 origination point.

You must also feel comfortable that the loan officer you are dealing with is committed to your best interests and will deliver what they promise. Often, the company that has the absolute lowest quoted rate may not be the best company for your mortgage business.  After all would you go to the heart surgeon with the lowest rates or would you go the heart surgeon who is a recognized expert and you trust for a higher fee.

Mistake #6: Pulling cash out of your credit line before you refinance your first mortgage

Always ask the loan officer or mortgage broker to review combining all of your loans together or refinancing your first mortgage because lenders will give you a rate reduction for loan amounts from $250,000 to $415,000.  Many lenders have "cash out" seasoning and usage requirements. This means that if you pull cash out of your credit line for anything other than home improvements, they will consider the refinance to be a "cash out" refinance. This leads to much stricter requirements and can, in some cases, break the deal!

Mistake #7: Choosing whether to pay higher "points" for a lower rate or to pay less "points" for a higher rate

Well, the only way to make sense out of this is to run a comparison of the total points and ongoing interest costs, and see which choice will cost you the least if you were to move out (3 points at 7.75%, 1.5 points at 8.0%, no points at 8.5%). Which way do you go?

In other words, you'll have to see how long you need to stay in the home to recover the higher points, offset by the lower rate or how short you may be staying in the house to warrant taking the lower points with the higher rates.

You just have to run the numbers to see which way will work best.  If you are confused then let me

Do the math and find out the answer.    

EXAMPLE:

30 Year Mortgage Loan Amount $100,000

After 10 years let's look at the numbers.

EX: 7.75% at 3 points or 0 points for 8.50% ???????

At 3 points: 7.75%=$716.41 / month X 120 months (10 Years) = $85,969.20 + $3000. (3 points) =$88969.40 (Tax savings for 3 points at 31% tax bracket) - 930.00
Grand Total = $88,039.40

At 0 points: 8.50% = $768.91 / month X 120 months (10 years) = $92,269.62

$92,269.62 with 0 points.
$88,039.40 with 3 points and tax savings.

Total savings of $4230.22 if you paid 3 points.

Follow the example, and figure out your numbers!

Mistake #8: Getting a second mortgage before you refinance your first mortgage

Many mortgage companies look at the combined loan amounts (i.e. the first loan plus the second) even when they are refinancing the first mortgage. If you plan on refinancing your first, check with your mortgage company to see if having a second will cause your refinance to get turned down. Additionally, be sure that any second mortgages will allow subordination (go back to second position if you want to refinance the first loan).

I hope you have enjoyed this special report. We currently have over 40 creative loan programs to fit your needs. Please contact us at 203-483-0061 to set up your FREE No-Obligation consultation where we will meet to tailor a program to fit your needs and comfort levels for monthly payment and investment.

Sincerely,
Chris Rivers
Chrysalis Funding
150 W. Main Street
Branford, CT 06405

Phone: 203-483-0061

P.S. If you would like to get started now please click the following link or image below to fill out a Free No-Obligation Secure Online Application and we will contact you to schedule a free consultation to help you get the home of your dreams with the best terms available...regardless of your credit!