| Q: |
When is the
best time to refinance? |
| A: |
The
traditional answer to that question is when interest rates fall 2
percent below your current mortgage interest rate. However, in recent
years some experts have argued that refinancing may be appropriate with
a smaller point spread.
Some weight is often given to the length of time the owner
anticipates holding on to the property. If the owner expects to keep the
property for at least three or four years, then refinancing may be
worthwhile.
While refinancing can involve upfront costs, in many cases it is
possible to roll the costs of the refinancing into the new note and
still reduce the amount of the monthly payment.
|
|
| Q: |
What about
these ads for no-cost loans? |
| A: |
In
many states, real estate regulatory agencies are cracking down on such
advertising. The very term, "no-cost" loan, is misleading
because borrowers are actually paying a higher interest rate in exchange
for not having to pay fees or closing costs up front when the loan is
secured.
A "no-points" loan is one for which the lender does not
charge points (one point is equal to 1 percent of the loan amount). But
there are other fees involved in no-point loans, as with most loans.
|
|
| Q: |
Where do I
get information on refinancing? |
| A: |
For
information on refinancing, the following booklet may be helpful:
* "A Consumer's Guide to Mortgage Refinancing; " Federal
Reserve Bank of San Francisco, Public Information Department, P.O. Box
7702, San Francisco, CA 94120; call (415) 974-2163 to order. |
|
| Q: |
Can I
refinance after bankruptcy? |
| A: |
Refinancing
may be prudent but could be difficult after a bankruptcy. If you're
considering bankruptcy, you may want to go to your current lender first
and explain the situation. If you have been current on your payments,
the lender may be accommodating and refinance your loan, easing your
financial situation. |
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