Being Mindful of the Scams That Accompany a Refinancing Boom - Part 2

A Home Buying Article Contributed by Robert Scalia

What are Some of the Things You Need to Watch out for When Refinancing Booms?

We already discussed a refinancing truth: Whenever interest rates are low, people will flock to lenders demanding the refinancing of their mortgage.

Getting informed before refinancing is the best way to steer clear of mortgage lenders and brokers who are looking to take advantage of people who don't seem to know what they are talking about. Busy periods make it a heck of a lot easier for these types to take advantage of naive consumers - so you want to make sure you don't become a victim.

However, your job doesn't simply end at getting informed.

When Refinancing, Know Your Fees

When refinancing, borrowers often forget to ask about fees.

What's more, they rarely compare lenders based on those costs. Instead, these borrowers actually allow these companies to hide their closing costs by avoiding the discussion and adding things like document preparation fees, underwriting fees and other charges to the closing costs.

It is true that lenders can't control all the third party fees ties to refinancing, such as title searches and appraisals. But they can adjust their own fees. You should know those fees right off the bat.

When It Comes to Refinancing, Don't Believe Everything You Read

Whether it's for refinancing or anything else, I don't think anyone out there will be to shocked to discover that advertising isn't always an honest business.

Companies have been touting "no cost" refinancing as of late, but this isn't necessarily true. Instead, what usually ends up happening is that a borrower will end up paying higher rates on these mortgages and lenders then turn around and use the extra money to pay the costs themselves.

Having said that, it's difficult for borrowers interested in refinancing to compare fees when they don't know what they are. It doesn't help that the law doesn't require lenders and brokers to give what's called the Good Faith Estimate documents until three days after they apply.

However, that doesn't stop you from asking about these fees before you commit to any refinancing of any kind. Keep in mind that reputable lenders and brokers will almost always be willing to provide one in order to get your refinancing business.

Whe It Comes to Refinancing, Know the Score

When refinancing, customers will often apply to have their credit scores pulled by their lenders. Why not ask your company to provide one as well?

Companies have no obligation to share them, but those scores often go a long way in dictating whether borrowers get loans and how much they have to pay for them. If you are a customer who obtains your own score, then you might just be able to get a rate quotes that is tailored to you rather rather than receiving quotes that may apply to people with better or worse credit.

Don't be afraid t ask. When it comes to refinancing, it never hurts to ask the tough questions.