Learn to handle your mortgage refinance – lower the rates, bring the term closer, read the contract and use an attorney
Karen Zuba
Jun. 15, 2007

It is important to make sure you know how to manage your future mortgage refinances. You should refinance only if you know you save a lot. Every time you decide to refinance, you pay fees and also the rates have a bid and asked price difference. For example wholesale rates (called warehouse rates) are lower that what you get as retile rates.

The mortgage lenders are eager to refinance your mortgage. Mortgage refinancing and paperwork processing is the most lucrative easy money in America today. Learn to negotiate very hard with your mortgage banker, broker and representative. As a simple question – ‘what’s there for me?’.

The biggest mistake people make is not to read the contract. The trick in many mortgage refinances is to make you sign a document that puts you in a higher risk factor zone on one or two defaults. Think about bad times. What happens something goes wrong and you cannot pay the mortgage for three or four months. Based on the contract how can you fight and stay in your property. How can you salvage the situation? I will be willing to pay higher rates if I know the bank has no choice but to bear with for nine or more months.

Use an attorney to read the contract. Some bad mortgage bankers and brokers will say ‘sign the contract, get the check and you have so many hours or days to rescind.” Do not fall for that. You must tell them – you have an attorney and you will not sign till attorney review is complete. Choose an attorney that is willing to negotiate with the lender terms in your favor.

Make sure you can lower the rates, and bring the term closer. Try to have the refinance set up so that you can off in a few years early. Biweekly payment is good if you are a service holder with fixed income. Lower rates have all kinds of catches. Look for balloon payment at the end of three or five years. Do not fall for negative amortization where at the end of the loan term, you owe almost what they lent you.

Involve a CPA and an excellent shrewd attorney to compete you refinance hunt.

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