Many homeowners allow some common mortgage refinance myths to dissuade them in refinancing their home. Sadly, you will see tons of half-truths online about refinancing. If you’re one of these homeowners, below are four of the prevalent refinance myths and the truth behind them.
Refinance Myth #1: If a Lender Turned You Down for a Refinance in the Past, You Won’t Have any Luck this Time Around
If you were turned down due a less-than-stellar credit or lack of equity in your home, you have probably resolved all that now since your first attempt at a refinance. Likewise, plenty of homeowners who didn’t qualify for the HARP Loan Program or Home Affordable Refinance Program in the past years could now qualify for it. According to various lenders, millions of homeowners are not aware that they could now qualify for the program due to the revised requirements introduced in 2011.
Refinance Myth #2: This is Not a Good Time to Refinance.
There are other reasons to try a refinance without having to lose your low rate. You could combine your first and second mortgages, take a cash-out, modify your loan terms as well as change from a fixed or adjustable mortgage or vice versa. The choice is all yours.
Refinance Myth #3: You Will Have to Pay Closing Costs… Again.
While there are refinance programs that could easily offset your closing costs, take note that these usually require higher interest rates. That said, paying off your closing costs is still the better option.
Refinance Myth #4: You Lose Home Equity or Slow Down its Accumulation When you Refinance.
You will only lose home equity if you choose a mortgage program that adds to the principal of your loan such as when you combine mortgages or cash-out refinancing. Otherwise, you hold on to your home equity and your principal won’t increase.
Do not let these mortgage refinance myths stop you from refinancing your mortgage. If you’re smart enough to do your due diligence when choosing a lender, you could save thousands of dollars in the long run.