1. If you have a fixed rate loan and can refinance into a similar term loan at a lower rate, you should refinance. From my perspective: if I can wave my hands at your 30 year fixed rate mortgage and lower the interest rate, then you are foolish not to do it. Some people say: "Yes, but I have been paying on my 30 year loan for 5 years and you want to replace it with another 30 year loan. This is going to cost me more in the long run". This is not correct. You can, in this situation, still pay the loan off in the same 25 years and be making a lower payment on your new loan than your old one. We will calculate the payment necessary to pay it off in 25 years. Plus many times, with the lower rate, and lower payment, although you may go back to a 30 year term, your "total" cost over the life of the loan may still save you money.
2. You took out a large Home Equity loan that just keeps going up and up and up.
3. You have a 30 year loan, with over 20 years left. Many times we are able to refinance these loans into 15 year terms while leaving the payment very near your 30 year payment. This is an obvious no-brainer, as the amount of money saved typically is in excess of $80,000, plus shaves YEARS off your loan. This is also the most frequent reasons people refinance.
4. You would like to pay your loan off as fast as possible
5. You have an Adjustable Rate Mortgage that is about to increase in rate but you are not pleased with where fixed rate mortgages are. You should look at a 1 year Treasury ARM and see if you can keep that same index and margin and "roll back" the rate for a year. This is a "no risk' proposition which in essence this gives you a break for exactly 1 year. During this time you should stay in touch with your lender to decide what to do during that year. I do this for a large number of my customers. I also regularly update my customers who have ARM's.
6. You have an adjustable (ARM) and your nerves can't take it any more. You simply want the certainty of a fixed rate loan. Here the key is to recognize that fixed rates are "bouncy" and you want to lock your rate at appropriate time. This is 50% skill, 50% luck.
7. You have a "balloon loan" that needs to be refinanced. Here, you need to discuss your situation with us. You may want fixed. You may want adjustable. The correct choice of loan depends on the market and most importantly, on your situation.
8. You need "cash-out". You may want an equity second or a new first. This depends on the relative size of your first and the cash out. Equity lines issued by direct lenders have low cost but high rate. You again have to discuss your exact situation with us, as we may have some costs, but a better rate.
9. You currently have a first and second mortgage. Banks love giving people second mortgages. Unfortunately, many of those people would have been much better off getting a new first mortgage instead. Lot's of people THINK a second would be better for them because their first (for example) might only have 18 years left. I regularly refinance people out of a first & second mortgage into a new first mortgage which saves them $100's each month while still paying off their loan in the time frame they want. Call today. I'll analyze your situation to see if a refinance makes sense for you.
10. You took out a 80/20 loan to purchase your home, and now both loans are adjusting. Switching to one low fixed rate loan to stop the ever increasing payments.

WHAT NOT TO DO WHEN REFINANCING YOUR HOME

There are a lot of things "not to do". I will point out only the 3 most common mistakes I see people make.

Setting an unrealistic goal. I always get inquiries from people who say something like, "I have a 30 year fixed rate loan at 5.875% and I will refinance ONLY when rates get to 4.0% with no closing costs". Sometimes I call people back and say, "Why 4%? why not 3% or 2%? They say, "Well rates are not going to go that low". Right and they are unlikely to go to 4% with no closing costs also ("no closing cost" loans typically cost anywhere from 1/2% to 1% higher than the going interest rate)

You should first succumb to the fact that once you can lower your rate with no out of pocket expense, you should probably refinance. Don't draw unrealistic interest rate lines in the sand. They get blown away too easily.

The "Once rates start dropping, they are going to continue to drop, I'm smart and I am going to lock when rates hit the bottom of the market" syndrome is another major problem. It is very hard to guess the interest-rate cycle, and pretty hard to catch the bottom. Remember that interest rates tend to go down slowly, but can rise fairly quickly.

"If the rate goes down just another 1/8th percent, then I'll lock" This one just kills me! I see people lose all the time over this theory. If your current rate is 5.875% and today's rate is 4.50%. LOCK & CLOSE! Most people have what I call "interest rate block". They get a rate stuck in their head, and that is the rate they want, no matter what. Most people fail to realize (and most loan officers fail to show them), that the difference on the average loan over 1/8th a percent is usually less than $15 per month. If you can save $150 per month on your loan at today's rate, why gamble? Why hold out for another $15 when the odds are against you?

Don't get piggy. Work with us. Set a goal and lock when it gets there. Are we going to hit the bottom? Probably not. Are we going to save you money? Yes. If you can save money with no out of pocket costs, than you have nothing to lose. If you want to gamble go to Las Vegas. It's a heck of a lot more fun. Apply Now

OTHER TIPS AND TRICKS TO SAVING MONEY WHEN REFINANCING

The purpose of most refinance loans is simply to save money. The goal is to minimize your expense over the life of the loan or to minimize your monthly payment in the near future.

If you can swing it, don't roll every cost of refinancing into your new loan. Most people escrow for taxes and insurance. If you do, your current lender must give you escrow refund within 30 days of paying off their loan. Your new lender, be it us or someone else, must take the equivalent amount of money (or more) at closing to start the new escrow account.

Remember that you always have no payment due the first month after closing. For example, if you close June 20th, your first new payment is August 1st.

Knowing this, paying some of your closing costs out-of-pocket will save you even more money in the long run. Why roll in $4000 in closing costs, when you really only need to roll in $2000 ($1000 escrow refund + $1000 missed payment = $2000). Paying that $2000 over 30 years doesn't make sense if you don't have too.

On the other hand, some people love the fact that they didn't pay anything out of pocket to refinance, got a nice escrow refund check, then got to miss a mortgage payment. They use the 'extra' money to pay bills, go on vacation, etc. 

BEWARE THE SKIP TWO PAYMENTS Tale

Many slimy lenders will tell you that you get to skip two payments if you refinance with them. Sure, if you don't make this months payment, and you automatically don't have a payment due the month after closing, it can feel like you 'skipped" two payments.

The reality is that because you didn't make the current month payment when due, the amount due to pay off the existing loan at closing will be higher, and you'll have a late payment fee.  You also risk having a late payment on your credit report if the loan doesn't get paid off in the month the payment was due. So you didn't really save anything, you just juggle the payment from today to the new loan.

You also really are not skipping the second month either, as mortgage interest is paid in arrears. This simply means when you pay of July 1st, you are paying June's interest.

Pro Tip: ALWAYS MAKE YOUR MORTGAGE PAYMENT WHEN DUE, and run away from lenders making the skip two payments claim!

Shopping for a home loan is confusing. No matter what we're looking for -- from cars to refrigerators' -- there's a built-in element of confusion. Why? Lack of knowledge. An unfortunate rule of thumb is that the less we know about something we need to buy, the more we can expect to pay for it.

Your current lender sounds like a logical choice to refinance. They take advantage of you because they know that many people incorrectly assume because they have your current loan, that somehow they can do it quicker, cheaper, and faster.

You couldn't be more wrong.

There is no short cut to refinance with your current lender. They still need to do everything over, get an appraisal in most cases, and collect the same supporting documents as anyone else. It still needs to go through underwriting, there still are closing costs, title companies, and everything else.  Interest rates are based on the mortgage backed securities bond market, and they can't magically give you a better deal.

As a matter of fact, because most people only call the existing lender, you almost never get the most competitive rates - because they don't have to. You just assumed they were good.

They add to this myth because the person on the phone says things like you'll get a Preferred Customer, or Existing Customer Discount. Sounds great, but usually it is meaningless.

Pro Tip: Call your local non-bank lender, or the broker who gave you the original loan if you want the best deal, or even search the term mortgage broker near me.