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Marcus Buchanan

A Sound Refinance

Monday, November 28, 2011 - Article by: Marcus Buchanan - Paramount Equity - Message

A sound refinance is one that benefits the homeowner. As I look around and read online as to some of the info and advice out there it can in many ways lead you a stray. What I mean by this is the information being provided is over the top or what I would like to say is too much. I often get asked when it is a good time to refinance and depending on who you're asking the answer is most defiantly anytime you can get a better rate.

First I like to be upfront and honest that's why I'm still in business today and a good majority of my competitors are gone. Every refinance situation differs based on what's going on in a homeowner's life.

Rates and what are they? Should I refinance for a lower rate? Should I lock right away or wait? What about the bond market and treasuries? Most of this info is way over the top for most homeowners.

The bond market and treasuries will not most likely affect your transaction. You have no control over the market unless you're a huge investor and your trading homes on Wall Street and good luck with that. The treasuries and bond info is for loan officers that pay good money to have up to the min information for what rates look like for the day. This allows them to know whether or not rates will be going up or not. Its good info if you're floating a rate that has not been locked, very risky. This was also a good way for the loan officer that did not lock your rate to get a better Yield Spread Premium and get a better commission on the low rate they offered you. Those days are now gone due to the many regulations that all lenders have to adhere to.

Should I refinance for a lower rate. I would like to say yes as long as there is a good purpose and it will benefit you based on your ROI (return on investment). Sometimes it could take as long as 10 years to get your money back based on ROI. This is especially true for loans under 100k. Remember to do your homework.

Is now a good time to lock my rate in or should I wait a few more days. I would say lock as soon as you can, unless you don't mind taking a risk, some of the rates is so marginal that were talking 15-35 bucks of a difference and in most cases even less than that. I have been cornered many times waiting for a particular rate and have lost many clients and loans because I tried to wait so I could get my client a better rate, see you next year if you know what I mean.

Rates and what are they; they are the finance charge based on an amortization schedule dictated by a hypothetical snapshot of time for a term that is to be paid off. I get a lot of homeowners wanting to refinance into a smaller term than 30 years. It doesn't always make sense because the person paying the bill has complete control over the amount of interest they intend to pay and in most cases it's always the minimum. If you have already paid your loan way down then you have disturbed the amortization schedule of interest you intended to pay based on a fixed amount of time. Thus you will not be paying as much interest over time than you previous agreed. If you have the discipline to pay extra towards your minimum payment then in most cases there is no need for you to refinance.

If you have any questions please feel free to contact me Marcus Buchanan at or by phone 707-636-3220

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