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What The Bank Won’t Tell You About Mortgage Refinancing
By: Paul Ashter
So you have a mortgage, and you need to refinance to get your interest rates
low. Most people simply walk into their bank, ask to refinance, and then end up
paying more money long term than they would have otherwise. Some banks would
like everyone who is refinancing to remain ignorant, but I am here to tell you
what banks don’t want you to know. Refinancing can be very beneficial, but one
has to understand the terms of the deal, and be very careful when choosing a
bank.
One mistake many people make is going to the bank and deciding to refinance
before actually looking at the home loan. Some think that their interest rates
are too high, and they have too many debts, so refinancing is the only option.
Be sure to look at the numbers, and then go over those exact same numbers with
your financial advisor. After discussing it, you can then decide to refinance.
It is always a good idea, even after you go over the numbers, to ask your bank,
“Do I need to refinance?” They cannot lie to you, but they can withhold
information. Banks do not want you to understand that fact. Asking questions is
one of the best things you can do. Banks love to let customers make bad
decisions. As a financial advisor, banks are obligated to tell you the best
possible course of action, but not required. Unfortunately, some banks simply
want profit, and so the customer’s financial situation is not of the utmost
importance.
It is up to you then to be informed about all aspects of your financial
situation before you walk into the bank. It is advisable to know just as much,
if not more than the bank does. Banks take advantage of the uninformed. Some
want their customers to be uninformed, because the uninformed individual poses
no threat and can be manipulated easily. An uninformed person may accept the
banks offer simply because the interest rates are lower. However, some banks try
to give lower interest rates for refinancing, but let the consumer end up paying
more over the lifetime of the loan. Additionally, banks can expose you, as a
borrower, to greater risks than you had with your previous mortgage with a
higher risk loan.
Along with understanding your own financial situation, understand the terms
being offered by the bank. The bank does not want you to “read the fine print”
because you might find something that you don’t like, and they would have to
change it, or get a new customer. All aspects of the new loan have to be made
available to you. Again, all the information about your loan is made available.
You, as the customer, just have to seek it. Most customers simply look over the
terms of a new loan briefly, merely focusing on the interest rate. They then
sign on the dotted line. Simply “skimming” the terms of a loan is never a good
idea. Banks won’t tell you, but it is always a good idea to understand the loan
more intricately than even the bank itself.
Refinancing a mortgage is a large financial commitment. It is important to be as
informed as possible on all aspects of your own finances and the deal offered in
the loan. Banks do not what you to know that they are required to provide all
the information to you. Also, as your financial advisor, they are obligated to
offer information, but not required. However, when asked directly, if they lie
to you, they can be in a whole world of trouble. Knowledge is the single most
important thing to have when refinancing. If you know what to watch out for when
refinancing, and what banks have to tell you, then you will have the upper hand.
Having the upper hand will allow you to refinance your mortgage in a way that is
best for you financially.
About the Author:
Paul Ashter enjoys giving advice on personal finance. Learn more at Mortgage
Lowdown ( http://www.mortgagelowdown.com
).
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