Chapter Excerpt


Having been in the mortgage business for nearly two decades, I've seen mortgage companies come and go. And I've seen mortgage loan programs come and go along with them.

Technology has made an impact on the mortgage industry. Mortgage loan approvals used to take several weeks to accomplish. Now, it's only a matter of days. Loans are approved using automated systems and no longer need human beings making judgment calls as to the borrower's creditworthiness.

Since loans are so easy to approve and take very little time to complete, the entry-level qualifications for loan officers are very low. Sure, loan officers have to get licensed in the state where they place mortgage loans. But trust me, the licensing procedure is typically nothing more than taking a rudimentary test and getting fingerprinted. There are more inexperienced loan officers in this business than ever before, all trying to get a piece of the "refinance pie."

Because of the ease of mortgage approvals, interest rates don't have to fall very much in order to make a refinance a reasonable proposition. And mortgage companies, in all their glory, can market themselves silly trying to convince you to refinance your loan with them. Heck, there are even classes that loan officers can take to learn how to convince you to refinance your mortgage.

Kids going to college? There's a refinance plan. Need retirement funds? There's a plan. Need to reduce your monthly payments? There's a plan for that, too.

The problem with all that is those "plans" are nothing more than variations on the very same loan program. The only difference: a new sales script has been written to fit the advertisement. And don't get me wrong, these "scripts" can be convincing. Loan officers don't get paid until they close a loan, so you can't blame them for trying to stoke their livelihood. But don't get too excited about those solicitations until you read this book.

Having been in the business so long, I've closed more mortgage loans than most loan officers have. I have also observed how the markets have developed over the years, how loan programs have evolved, and how technology has impacted the mortgage industry.

The mortgage business can be intimidating. Its jargon can be confusing, at best, and deceitful, at worst. Lenders make loans all day long, while you may only get a mortgage a few times in your life.

Refinancing your mortgage takes more planning than when you were searching for a loan to buyyour home. When you bought your property, you were focused on the "big picture." You needed to close on time, the property needed to pass inspection, there were property taxes to be paid, and so on. But with a refinance, you're focused on one thing and one thing only: your loan.

Excerpted from An Insider's Guide to Refinancing Your Mortgage: Money-Saving Secrets You Need to Know by David Reed
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