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Lower Interest Rates Cause Refinance Solicitation In Clarksville, TN By Amanda

Are you getting a lot of junk mail regarding refinancing your current home?  Are you getting offers of 4% interest rates?

Beware of refinance solicitations.  When interest rates start to go down,

loan officers come out of the wood work trying to get you to refinance.  Majority of these low interest rate offers will involve paying discount points or other fees.  Sure, it sounds great if you have a 6.5% rate now and are offered a rate of 4.5%.  That is a two point difference.  Most advice I have ever heard is refinance if you can lower your interest rate by 2% or more.  However, beware of the cost to do the refinance.  You may go down 2% on the interest rate, but the costs rolled into your loan could raise the balance of your loan by $5000-$10,000!!

The loan officers will tell you:

• We can lower your interest rate.
• We can lower your monthly payment.
• We can help you to skip one or two months of mortgage payments.

What they will not tell you is:

• $5,000-$10,000 will be added to what you owe on your home if you roll in the costs of the loan.
• If you try to sell your home within a few years of the refinance, you may not have enough equity causing you to have to bring money to closing.
• The rate is actually 5% and you are paying fees to get to the 4.5% or 4%.

It is so important to be fully informed when considering a refinance on your current home.

Remember that all owner occupied refinance loans have a three day right of recession.  What that means is, if you sign the closing documents to refinance your home and then you realize that it is not in your best interest to do the loan or you have been misinformed, you can cancel the loan in the first 3 days following the closing.

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