Broker Ben's California Mortgages

• MYTH #1: You must reduce your interest rate by at least 0.5% to justify refinancing.
  TRUTH: This is a self-serving myth perpetuated by mortgage lenders that do not want to lose their customers. With a no closing cost mortgage, even a 0.25% rate reduction is a no-brainer because you can pay off a 30-year mortgage two years earlier if you cut your rate by 0.25% and you continue making the same monthly payment. You can do this without increasing your loan balance and, over time, more of your payment will go to principal. You can refinance to reduce your monthly payments, eliminate private mortgage insurance, pay off a second mortgage, get cash out, convert from a fixed rate to variable, or convert from variable to fixed.
• MYTH #2: Don’t refinance unless your mortgage is at least one year old.
  TRUTH: You can refinance at any time if it makes financial sense.
  Millions of savvy borrowers (mortgage brokers included) refinanced two or three times in 2003. If you are reducing your interest rate and not paying closing costs, refinancing is a no-brainer.
• MYTH #3: Refinancing is like dental surgery.
  TRUTH: This is true if, only if, your broker or lender still processes loans the slow, bureaucratic, and cumbersome way. Mortgage automation makes the process fast, easy, and painless. You can obtain an “A” credit Fannie Mae mortgage approval without an appraisal, tax returns, W2s, bank statements, or reams of other documents. You can apply by phone, fax, online or by mail then sign final loan docs at the escrow company, at home, or at work. I have originated and processed loans since 1989 and know how to eliminate the pain and suffering… many of my clients close in 12 days or less.
• MYTH #4: You should not pay off a mortgage if it has a prepayment penalty.
  TRUTH: Mortgage lenders love captive customers. Some mortgage lenders charge their customers a prepayment penalty then advise them to “hang in there” for a couple of years. They know that if the customer waits a year or two to avoid the penalty, mortgage rates may rise and make refinancing expensive. A 1% rate increase on a $300K loan means $3,000 in extra interest charges in the first year, and tens of thousands of dollars in additional interest over the life of the loan. Interest rates are heading higher. If you have a mortgage loan with a prepayment penalty and your circumstances have improved, it could be time to switch. Review your loan docs again; you could be sitting on a time bomb.
• MYTH #5: Bad Credit = Bad Mortgage (or No Mortgage).
  TRUTH: Minor collections and a few late credit card payments will not prevent you from getting an “A” or “A-” loan if the following apply: a) you have a steady, adequate, and legitimate source of income (self employment is OK); b) you have not been in foreclosure; c) any bankruptcy was filed at least two years ago, has been discharged, and credit is reestablished); d) you have sufficient equity; e) your mortgage payments have not been over 30 days late in 12 months; and f) you have two months’ income in liquid assets. There are hundreds of other great programs for people who do not meet these criteria.
• MYTH #6: Higher Interest = Higher Tax Deduction = Greater Overall Savings.
  TRUTH: Tax deductible interest simply means that the IRS returns some of the interest you pay; the more interest you pay, the less money you keep. Paying a higher interest rate to get a higher tax deduction is like buying a Mercedes because you could use a new set of tires; or buying extra boxes of corn flakes for the plastic toys; or buying extra airline tickets for the frequent flyer miles… ok the extra cornflakes makes sense if you have kids.
• MYTH #7: Banks and credit unions offer the best mortgages.
  TRUTH: 65% of all borrowers obtain their mortgages through mortgage brokers. Savvy borrowers know that mortgage brokers and mortgage bankers can offer better service, greater flexibility, less bureaucracy, deeper knowledge, tremendous value, and choice. Mortgage brokers are specialists who can offer lower rates and a wide variety of mortgage options. If you call your bank or credit union for a quote, they will probably quote points and fees that make refinancing an expensive proposition. Fortunately, banks and credit unions are not your only option.
• MYTH #8: You need to have money in the bank to buy a home.
  TRUTH: Even borrowers with serious credit problems can buy a home without any money in the bank.
  

HAVE MORTGAGE QUESTIONS? Call today for a free, no obligation consultation:
(888) 337-9944