Myth: Refinancing will be just like obtaining your initial mortgage.
Every refinance is on a case to case basis. The lending industry at large has got their underwriting guidelines constrained because a lot of lenders have been stressed with bad loans. If your initial loan did demand a lot of paperwork, you might be stunned by today's policies. This poses a problem for some borrowers but the renewed guidelines benefits the industry and the economy. Although the fundamental rule remains the same; bad credit or not much equity in your property, getting approved for mortgage refinancing is not as easy as pie.
Myth: A refinance will always trump your initial mortgage deal.
While one of your reason to get refinanced is to get a better deal, chances are, it is not always going to end up that way. Closing costs are tied in when you draw out a loan refinance. If you don't see yourself staying in your home for good, they may not pay for themselves in savings in the future. If this is the case, you may opt to consider your local market and whether or not the thought that you'd manage to sell your property at that time is in sync with reality. Otherwise, a refinance is in the end more worth it.
Myth: Refinancing is equivalent to lower monthly costs.
It's obvious enough this is true, although some consumers refinance for increased monthly costs. Why? Some homeowners do it to modify the type of their loan or the terms of their loan. They may opt to refinance for a shorter term - which may lead to higher monthly costs - which means less finance costs and is a total savings.
Myth: Having a loan means you'll always be able to obtain a refinance.
Not really. First, you have to qualify for a refinance, and you need to find out whether or not you have the right equity in your home. If you choose to acquire a no interest loan or have used a home equity loan to take up against the equity in your property, there's a chance you might not get the property equity for a refinance. Usually, you have to have at least 20% equity in your property to refinance. Bottom line: You can't get a refinance if you owe more than your property is worth.
It's hard to be misinformed, especially if it might lead into you making the wrong choices. When it comes to mortgage refinancing, if you're in California, choosing to go for a California escrow service can help you through the entire deal and can further clear out all those myths you've been hearing about.
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