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We're getting all these mortgage refinance offers - scams?

post #1 of 9
Thread Starter 

We own our first home for the past 5 years. Recently we've been getting an onslaught of refinance mail. What's the deal with these things? Why are we getting them now? I think as a result of money being tight for my second birth, we have lower credit than we did when we bought our house and yet then it was kind of hard to get a loan.

 

Do you think it's worth looking into refinancing even with lower credit? We have a 30/15 year balloon loan and have paid off about 4 years worth. We planned on waiting to refinance until after I was working (a few more years) but if the offer to refinance and lower our payments is legit, we'd take that. Freeing up a bit of cash every month would go a long way. 

 

Thanks for the advice. 

post #2 of 9
For the most part refinancing offers are legit, the rates are low right now and trending up. Don't fall for the bi-weekly payment plans offered by third parties though, those are a scam.
We refinanced earlier this year mainly because the rates are so low that we cut our 30yr fixed to a 15yr fixed with a very slight increase in monthly payment. Our goal was to decrease the amount of interest paid, not to lower our monthly payment.
Any bank can offer you a mortgage but I would stick with one that's local, that has a physical location you can walk into and talk to a person if you have a problem. Nothing prevents them from reselling your mortgage to another bank of course and that was one thing we asked our mortgage person.
Looking into refinancing shouldn't cost you anything. Your credit rating will determine what kind of rates you qualify for. I've heard as a general rule it's not worth refinancing if you can't get 1.5% less than your current rate. But ultimately you decide what factors are most important (lower payments now vs. less interest paid in the end)
Lastly, it's a personal choice and again, depending on your situation it's more or less appropriate, but I would never go for an adjustable rate mortgage with a balloon payment. I like knowing that we're locked in for $X a month for the next 15 years, whether our income goes up or down, at least we know the minimum we need to meet.
post #3 of 9

Given that you have a balloon, I would definitely look into refinancing, especially as the rates are low, but increasing.  I would call the company that has your loan to see what they might be offering.  When you get your GFE (good faith estimate), utilize a calculator to make sure refinancing makes sense for you and your family.

post #4 of 9

yeah under the new laws they can offer you much better rates and so on. I would look into it for sure.
 

post #5 of 9
Thread Starter 

Where would you look first for refinance offers? Do I just do an internet search? Or call my local credit union? 

post #6 of 9
Quote:
Originally Posted by IdentityCrisisMama View Post

Where would you look first for refinance offers? Do I just do an internet search? Or call my local credit union? 

 

I would start with your current bank.

 

I refinanced on a previous home a few times and went with someone different each time.  I would always look for online reviews of mortgage companies and/or loan officers if you're going with someone smaller.  I have had luck finding companies through the City Data forum and I've also winged it and went with the company that had the best overall terms.  Ensure you get a GFE (good faith estimate) from each company you're considering so you can make an educated choice.

post #7 of 9
Thread Starter 
Quote:
Originally Posted by Mulvah View Post

 

I would start with your current bank.

 

I refinanced on a previous home a few times and went with someone different each time.  I would always look for online reviews of mortgage companies and/or loan officers if you're going with someone smaller.  I have had luck finding companies through the City Data forum and I've also winged it and went with the company that had the best overall terms.  Ensure you get a GFE (good faith estimate) from each company you're considering so you can make an educated choice.

Ok, I guess I'll stop in there today. We use a local credit union anyway and I happen to really dislike the local bank who currently holds our mortgage so I'm happy to switch. Looking on line at the process is a bit daunting but, like someone said, we have a 30/15 balloon so we'll have to refinance at some point anyway. 

 

When we purchased our home we paid cash (with money from a family loan) and then refinanced that same year. What happened is that we didn't realize we would have a bunch of double charges so I'm a bit leery about the whole process still. All those fees!  

post #8 of 9
Quote:
Originally Posted by IdentityCrisisMama View Post

Ok, I guess I'll stop in there today. We use a local credit union anyway and I happen to really dislike the local bank who currently holds our mortgage so I'm happy to switch. Looking on line at the process is a bit daunting but, like someone said, we have a 30/15 balloon so we'll have to refinance at some point anyway. 

 

When we purchased our home we paid cash (with money from a family loan) and then refinanced that same year. What happened is that we didn't realize we would have a bunch of double charges so I'm a bit leery about the whole process still. All those fees!  

 

Yes, there are a lot of fees that you will pay again.  That's why I suggest obtaining the GFE(s) to see the numbers and then running it all through a calculator to make sure it will work for you.  We refinanced a couple different ways - we paid the fees outright, we took a higher interest rate (still much lower than we had) to avoid closing costs, etc.  I've always used a calculator to see the break even time frame because if it doesn't save you money and make sense for your situation, it isn't worth the hassle (and it's always a hassle!).  smile.gif

post #9 of 9
Thread Starter 

Thanks so much. I got the card of the mortgage person at our bank and will make an appointment with her soon. 

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