(Originally published October 23, 2010)
Interest rates are currently at historic all time lows. And homeowners are again thinking about refinancing their mortgages.
During these times, banks receive tons of inquiries. Bank loan officers, who are often just glorified customer service representatives, read from their scripts and reinforce misconceptions about mortgage lending. In fact, many banks have built their business models on perpetuating these myths! Well guess what? You’re about to learn the truth that banks hoped you would never find out:
My bank already has my information. I’m a good customer. It will be easier going back to them.
About 80% of all mortgages in the United States are packaged into pools of securities and sold in the secondary markets. They are underwritten to strict Fannie Mae and Freddie Mac guidelines. Regardless of how warm and cozy that bank representative makes you feel, in order to meet these guidelines, the underwriter must document the package accurately. This means you WILL provide the same paperwork for your mortgage application, regardless of what lender you apply with. And once that package is in front of an underwriter, they’re following those same guidelines when deciding whether to approve your loan. Don’t believe me? I’ll be happy to show you a dozen examples of good borrowers who went back to their bank to refinance – only to be denied.
Want to assure your loan is approved? Work with a professional Mortgage Planner who will get your loan closed by structuring your loan correctly and submitting it to the right lender.
By going back to my bank, I’ll save more money. They won’t charge me closing costs again. – OR – By going back to my bank, I don’t have to pay mortgage tax again.
For properties in New York State, closing costs are closing costs. Most are regulated by the State. For a specific property and loan amount, your costs will be virtually identical regardless of what lender you choose. It IS true that when refinancing, you might be able to do a CEMA to avoid paying mortgage tax again. However, what your lender won’t tell you is that you can do a CEMA and avoid mortgage tax by going to almost any other lender!
There are also a minority of lenders that portfolio their loans. These lenders CAN simply drop your interest rate for a flat processing fee. If you would like to know who these lenders are, feel free to contact me. I’d be happy to tell you.
Have you ever heard this statement from your bank? “Our trained mortgage professionals will help you (blah blah blah).”
Ohhh pulease. Are they kidding? McDonalds also has a trained staff. You want one of them handling the most expensive financial instrument of your lifetime?
- Are the “mortgage professionals” at your bank licensed originators? Probably not.
- Have they passed federal and state exams before originating your mortgage? Probably not.
- Are they Mortgage Planners? Do they have the financial background to help you choose the best mortgage to achieve your financial goals and cash-flow needs? I highly doubt it.
- Are they good sales people who know how to close the sale? You betcha.
These super-low rates won’t be around forever. This refi-boom will evaporate just as quickly as those in the past. Despite this, many homeowners still have not thought about refinancing. They could literally save tens of thousands of dollars over the lives of their loans. But for some reason, refinancing is not on their radar. Are you one of them? If so, who are YOU going to call?
Working together, we can ensure that you’ll understand the short and long term ramifications of your options, that your mortgage complements your financial plans, that your transaction goes smoothly, and that you truly enjoy your home for years to come.
Since 1992, Warren Goldberg has helped thousands of clients own their homes, refinance their mortgages, restructure their debts, and invest in real estate. Warren is known for his wide knowledge of mortgage products and wealth-creation strategies.