Refinancing can be a pretty big deal — it’s a home loan involving another home loan, so of course it can make a homeowner anxious to think about.
But there are some perpetuated myths that we need to clear up. Hopefully, if you’ve been blocked from refinancing by these worries, you’ll understand them a little better after reading below…
Myth #1: The Fees Make It More Expensive Than Not Refinancing
The truth: while it’s true there are fees involved, unless you take a particularly bad loan from a careless lender, you’ll very likely save money over time. And with current rates being what they are, it’s likely you’ll save lots of money.
To start seeing that money saved in a reasonable time frame, you’ll want to speak with us here at Capstone Direct. We will look very carefully at your current situation and your available options to make sure the fees don’t offset the savings, and that your break-even point matches up with your goals.
Myth #2: With a Refi, the Institutions Can Seize Your Other Assets
The truth: this technically can happen, but it’s nothing to worry about if you don’t default on your loans. The situation is basically this: most initial mortgages are “non-recourse” loans, meaning if you don’t pay, then the bank can foreclose your house and keep the proceeds from a sale, but they wouldn’t be able to seize any of your personal belongings or other assets. Some refinanced mortgage loans aren’t “non-recourse” loans, meaning if you default after refinancing with one of those loans, the institutions could seize other assets to make up the difference between the remainder of the loan and the proceeds from the sale of the house.
So ask yourself: are you refinancing specifically because you’re at risk of missing your payments? Talk to Capstone Direct; we can help you sort out your options and advise you on the lowest risk plan we can find.
Myth #3: You Need Amazing Credit to Qualify
The truth: while better credit will usually get you better rates, there’s no credit requirement to explore your options. You can get refinanced and still save money even if your score is less than 720; it’s just that 720 or above is probably the requirement for the rates being advertised.
There are more refinance loan options in Thousand Oaks than you may think, even if your credit is less than perfect.
Myth #4: You’ll Get Penalized For Paying Off the First Loan Early
The truth: some loans do have an “early payoff” fee. Some are bigger than others. The goal behind this is to ensure that the banks can keep collecting money on interest for longer periods of time, bringing them more profits.
In most cases, it’s not enough of a financial burden to prevent saving money by refinancing. When you talk with us at Capstone Direct, we’ll go over your options and all the fees together, so you can have a clear picture of your break-even point. This will include any fees for paying off the initial loan early.
5. Myth #5: If I Refinance, I Can’t Move
The truth: there wouldn’t actually be anything preventing you from moving. The worry most people would face is that it may take a few years of living in that same house to break even and recoup the savings for their refi.
If you plan to be in the same house for a long period of time, then there’s nothing to worry about with refinancing.
6. Myth #6: The Savings Are Too Small to Make Refinancing Worthwhile
The truth: that’s a ridiculous notion. When you’re dealing with something as big as home loans, even half a percentage point can make a big difference in your daily life.
Talk with us. We’ll work hard to ensure that you save as much as possible on your monthly payments.
Myth #7: There’s Too Much Paperwork!
That one is actually totally true. There’s lots of paperwork. But if you work with Capstone Direct, we’ll do most of it for you!
Speak with a refinancing expert today!