What should I know about refinancing?

There are several things to know about refinancing. Make sure you make copies of all your paperwork and dont give out originals. Make sure you order your own appraisal. Make sure you compare all loan offers carefully.

When refinancing make sure that you do not make any additional purchases on credit cards. The other major issue is to make sure you make all payments on time, including your mortgage.

Understand that a loan takes time and you need to plan accordingly. Often a loan can take up to 3 weeks to complete.

A successful refinance transaction usually hinges on a good appraisal. Do some research on your own to determine a conservative estimate of your home's current value, or contact a local real estate agent and ask for the market data on your neighborhood. Real estate agents usually have access to the same data as an appraisr.

Be sure to review the Good Faith Estimates and the Truth In Lending (TIL) when comparing different loans from various brokers or banks. Be skeptical if the settlement costs are extraordinary high or exceptionally low. Unscrupulous loan officers may purposely omit some of the charges to gain your business.

One thing you will want to check on is whether your loan has a "pre-payment penalty". Many lenders will charge you this penalty if you refinance within a short period of time.

When contemplating a refinance be sure to check carefully what the loan will cost you. The cost will include any points paid, fees charged by the broker and/or the lender plus all title and escrow fees. You may want to see if a no cost loan, where the broker or lender pays all your closing costs, is appropriate for your situation.

When refinancing it is important to weigh the value of your home equity, and what is more important, building that equity, or taking the cash out for debt consolidation, home improvements, etc...Many people take the equity out of their home at every chance they get, and while it is helpful in the short term, usually to alleviate the pressure of bad spending habits, it will hurt any plans of long term investments and profiting from your home's value.