There is a refinancing myth that says you should not refinance your mortgage unless your interest rate will be at least two points less. This myth is not necessarily true if there are other benefits to the refinance or other reasons behind it.
There are literally thousands of mortgage companies all over the country. It is important that you choose a reputable one. Most reputable companies will be part of the Better Business Bureau or other community watchdog group. Good companies will also have websites that rank well on search engines such as Yahoo and Google.
Both new homebuyers and refinancers can get free access to the credit reports that lenders use by visiting AnnualCreditReport.com, a website created via Congressional mandate. A free report from each of the three consumer reporting agencies -- TransUnion, Experian and Equifax -- is available at no cost every 12 months. Check for errors; if mistakes are found, don't hesitate to dispute any and all inaccurate and derogatory items.
Be Realistic. Lenders have tightened up loan requirements, so you'll need a good credit score and at least some equity in your home to refinance. To figure out how much equity you have, subtract the total amount that you owe on all of your existing mortgages from how much you think your home is worth. If your credit is severely impaired or you owe more than the value of your home, you probably won't be able to refinance right now.
Ask for the reissue rate on your title work. If you've taken a mortgage within the past two years, or are using the same lender, you might be granted this option, which can save you as much as 70 percent on your title work. An editor at this magazine didn't know about this potential savings when he refinanced his mortgage; fortunately his lawyer did. The savings more than covered the attorney's fees. However, if it's been several years since you took out a home loan, or if you're using a new lender, you'll likely have to pay for a new title.
