3 Things to Know Before You Refinance Your Mortgage Loan

Mortgage refinance rates are at record lows, and many people, myself included, are clamoring to the mortgage lenders in hopes locking in a better rate and saving extra money each month.  I’ve refinanced my house multiple times over the past 10 years, so I’m no babe in the woods when it comes to the process. But it seems this time around has been particularly difficult, time-consuming -- and expensive. 

Here are 3 Lessons that I learned the hard way.  They could have saved me $500 bucks and hours of aggravation had someone told me about them, so I thought I'd share what I’ve learned.

Lesson 1:  Going to your existing financial institution will not make the process any faster, easier or more convenient.
These days the loan restrictions are very tight and everybody starts the refinance process from the ground floor.  There is a ridiculous amount of documentation required, and there is no special treatment.  No wiggle room.

In fact, by going to my current bank, (who will remain nameless, but ends in “of America”), I locked myself into the slowest, most painful loan process I have ever experienced.   A good idea is to begin with comparing refinance mortgage loans online.

Lesson 2:  Until your loan is actually “locked” your Good Faith Estimate (GFE) is basically worthless.
After finding lender who offered a lower rate, lower fees and faster turn-around than my current bank, I started the process again.  I believed (partly because they told me) that my Good Faith Estimate was accurate and they would lock in my rate as reflected in the GFE or lower "once they cleared a couple things", ran my credit and got my non-refundable $495 contract /service fee. 

I’ll spare you the details, but the bottom line is this.  When they talked about “clearing up a few things” prior to “locking” your loan, here’s what they really meant:

• Obtaining a new new appraisal (7 working days)
• Clearing title (3 working days or more depending on report)
• Subordinating any equity lines or 2nd mortgages (7-10 working days) 
• Or More!

By the time they were prepared to lock the loan, my Good Faith Estimate was off by nearly an entire percentage point from their proposed “lock” rate, and my $500 would not be refunded.  The lesson here; be sure your rate is actually locked, or understand the lock requirements and time-frame prior to signing, paying for or agreeing to anything.

Lesson 3: Be patient.  It will only hurt for a minute (or in my case, 3 months)
Refinancing mortgage loans is not easy.  But the rates are low, so in most cases it makes sense to try to lower your expenses and get it done.  The last thing I learned is to not stress over it and just be patient.

For better, or worse the old days of getting a mortgage refinance done in a couple weeks are over.  The reality is the process could take 90 days.  They will have you digging up documents you never heard of, some that you never got and some that probably never existed.  Stressing about it and trying to hurry the process won’t get you anywhere.  So get organized, take a deep breath and be ready for the long haul.  Good luck!

So you're in the market for a new car?

4 ways to get your best deal on a car
So you're in the market for a new car? Here's four ways to save.

1. Get the Money Upfront.

The single most important thing I can tell you is this: If your car costs more then 15% of your take-home pay, it's too much. So before you start looking:

Price the whole package, not just a car. Remember that you'll be paying taxes, title fees, ect. at the time of purchase. That can add up to 10% to the cost of the vehicle. So for a $20,000 car expect to pay an additional $2000-$2500 in taxes and fees. You also need to account for insurance, fuel, maintenance, repair, parking, tolls, and often times, finance charges for your vehicle loan. Your budget should take all these factors into account.

Know your credit score and get pre-approved. If you're going to finance your car, get a copy of your credit report at myfico.com or contact the credit reporting agencies for a free report. Always shop for your auto loan before you shop for your car. To compare rates and terms, go to BankRate.com or your credit union if available. Low-down-payment loans with small monthly payments may look attractive but will cost you more in the long run, so aim to put down the largest down payment and opt for the shortest term you can afford. Get access to the top loan sources for every credit situation at www.upfrontfinancing.com

2. Do your research on line...then in person.

Now that you know what you can spend, it's time to get informed about:

Reliability. For comprehensive car-test data and lists of the best and worst used cars, check out Consumer Reports' Web site or get a copy of the magazine's April issue -- their annual automotive issue -- at your local library. This is my favorite resource.

Pay particular attention to 3-to-5-year-old "Best Bet" models. These historically reliable, top-rated vehicles generally have years of life left in them, yet can cost less than half as much as their new counterparts, making them perhaps the wisest of all car buys.

Once you know what type(s) of vehicle you're interested in, it's time to find the best deal. The sites below are valuable for finding the right price range for your vehicle. Check out one or more of these sites for a complete lowdown on the models you're interested in, and narrow in on a few top picks:

· AutoTrader.com: Prices, research, and comparison information.

· Kelley Blue Book: Prices, reviews, ratings, and buying advice.

· Craigslist - Prices from llocal dealerships and private sellers

Insurance. Especially if you're under 25, unmarried, and male -- and even if you aren't -- insurance cost can be a deal-breaker. So get an actual quote on a specific year, make, and model of car before you buy. Also, be aware that some cars -- especially sporty coupes, convertibles, and high-performance cars in general -- can cost hundreds or even thousands of dollars more per year to insure than others. To compare quotes on vehicles, try Insure.com.

3. Look at Some Actual Vehicles

Now that you've got a "short list" of vehicles that meet your budget and needs, print out the ads from multiple dealerships and then go visit a dealership to test drive some cars. Give each prospective purchase a three-tier check:

Give it a thorough lookover. Print out several copies of this pre-purchase checklist and take them with you when you go shopping.

Check its history. Ask to see the vehicle's title. Copy the Vehicle Identification Number (VIN) and have CarFax.com search for any abnormalities -- such as evidence of odometer rollback, theft, serious accident, or flood damage.

Get a professional pre-purchase inspection. Ask the seller if you can take the vehicle to a mechanic of your choice, or a national auto inspection chain, such as Carchex.com or Pre-CheckedAutos.com. If the answer is no, don't buy the car.

4. Take your time and control the negotiation

Once you've found a car you like at the right price, it's time to negotiate the deal.First, decide on how much you're willing to pay. There's nothing that says you have to pay the car's asking price. You're in control of the transaction, so you decide what your magic number is. Promise yourself that if you can't strike a deal for that price, you'll walk away. There are lots of other cars out there, and you can always reconsider and make a higher offer later.

Never negotiate based on a monthly payment. It is a classic way to get you to pay more for the vehicle through "creative financing" techniques. You need to negotiate each item separately. Vehicle price. The value of your trade-in vehicle (if you have one) then the terms of your financing.

Assemble your documents. Print out a copy of a valuation of the car from one of the car-pricing Web sites mentioned above, entering the appropriate condition, mileage, model, options, and location as requested. Bring a copy of the professional pre-purchase inspection and the CarFax report. Use these resources to negotiate your best price.

Review the paperwork. If you're financing the car make sure you understand the terms of the loan agreement. If there's a transferable manufacturer's warranty, ask to see the warranty paperwork, and confirm the terms. Visit this Federal Trade Commission Web page for more information on reviewing loan agreements and vehicle warranties and on steps to take when buying a used vehicle in general.

Finally, don't fall for "car loan insurance". A wonderful profit center for some car dealers is "car loan insurance." This insurance pays the car loan off if you die "prematurely", meaning before the dealer gets fully paid. Don't take this insurance. If you die before your car is paid off, the dealer can come get it if they want it.

Vehicle service warranties are a great way for the dealer to make money as well. If you're buying a reliable vehicle (see number 2 and 3) then you may want to consider skipping the warranty all together. If you'll sleep easier at night knowing you have one, be sure of what you're paying for, and know that the price they start with often has about $1000 profit in it.

Also some unscrupulous dealers will not only push you to buy this insurance, they will sell it to you up front, and then bundle it into your car loan. Don't fall for that tactic, either.

Use these tips and you'll be buying your next car the smart way. Happy Driving.