Beware of Quick Refinance Closings

Mortgage interest rates are hovering near historic lows. Your phone, email, and mailbox are full of offers from lenders nationwide all promising great rates.

You may have even accidentally responded to some ad promising rates so good, even good couldn’t get them. Only to find out it was really just an aggregate site like Lending Tree who isn’t even an actual lender. Rather, they bait you with awesome rates, then sell your information to multiple real lenders, who all now telemarket you to death.

Refinancing makes sense, so who do you pick?

It is well documented that your best deals are usually at your local non-bank lender / mortgage broker. While it may seem counter-intuitive, but using your current lender is usually never a deal.

BEWARE of mortgage lenders creating a sense of urgency, and trying to, or promising to close your refinance quickly. THIS IS BECAUSE the last thing they want you to do is think about the real terms of their offer.

Fast talker, and urgency are ALWAYS a sign that you should run the opposite direction. For example, it may sound like a great rate, but did you realize you are paying 2, 3, or 4 points to get it?

More warning signs are tricky statements like “No closing costs” – There is no such thing as a no closing cost loan. All mortgage loans have closing costs, and YOU will always pay them somehow. When many lenders claim no closing costs, this really means no out of pocket costs because the costs are rolled into a new higher loan amount. This is OK, and very common, but saying it this way is slimy and misleading.

All lenders can make your refinance a true no closing costs, no lender fees, or reduced closing costs – but this is always achieved the same way. By INCREASING the interest rate they offer. Small reductions in closing costs equal small rate increases, while going to a full no cost loan equals BIG rate increases. Again, not necessarily bad, but you need to understand the math of what you are doing.

Interesting note is that for all the people who call me asking about a no closing cost refinance, after doing the math, almost all of them do a standard refinance… Hmmmm….

Take a breath. Slow down, and make sure you 100% completely understand the terms of the largest transaction of your life. Work with someone who explains everything, and isn’t using classic bait-n-switch terms.

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Experience the Cambria Mortgage difference by calling (651) 552-3681, or by visiting iMortgageJoe.com.

I lend in Minnesota, Wisconsin, Iowa, North Dakota, and South Dakota. NMLS 274132