Summary

The author shares insights on home refinancing, emphasizing the importance of shopping around for lenders, understanding the process to minimize surprises, and actively managing Private Mortgage Insurance (PMI) removal.

Abstract

Ashley Nicole discusses her personal experience with refinancing her home, highlighting three key lessons learned. Firstly, she advises homeowners to not blindly trust their current lender for the best rates, as better offers might be available elsewhere. Secondly, she suggests asking specific questions to fully understand the refinancing process and associated costs to avoid unexpected issues. Lastly, she stresses the need for homeowners to be proactive in removing PMI, as lenders may not automatically terminate it when conditions are met according to the Homeowners Protection Act (HPA). The article aims to inform and prepare others for the refinancing process based on the author's experiences.

Opinions

The author initially believed their current lender would offer the best rate, but found that other companies provided better service and rates.
There is a perception that current lenders should offer existing customers their best rates, which may not always be the case.
Communication from the author's initial lender was seen as poor and non-transparent, contributing to their decision to switch lenders.
The author was impressed by the transparency and friendliness of the new lender, which influenced their decision to refinance with them.
The author expresses frustration with their original lender's reluctance to remove PMI as required

3 Things I Wish I Knew Before Refinancing my Home

Please read this before refinancing!

I am sure you are hearing about it all over the place…

Refinance now while the interest rates are low!

My husband, Luke, and I were no exception. We were hearing about people refinancing everywhere from colleagues, to friends, to people on YouTube making videos about it. We were also starting to be bombarded with mailers offering us this lower rate and that lower rate.

We ignored it for awhile because we wondered if it would really benefit us that much in the long run? We kept it in the back of our minds until one day we decided to seriously look into it. We had received an offer in the mail from our current lender offering a lower interest rate than we currently had. We thought that going with our current lender would be the smartest move given we already had a loan with them so they should offer us the lowest rate possible. This leads me into the first thing I wish I knew before refinancing my home…

Shop Around!

Do not always just refinance with your current lender because you trust that they are going to treat you well and offer you the best interest rate on the market at the time. Luke and I thought this same thing but quickly realized that other companies treated us better and offered us better rates!

We started by filling out an application online with our current lender to refinance our home loan. It took them forever to get back to us and they were not transparent in their communication. Shortly after starting the refinance process with them, we received a mailer from that same company offering us an even lower rate than the one they originally offered us. When we asked them if we could get our rate changed to this new lower rate they were offering, they told us they could only consider this if we provided them with a quote from another lender offering us a lower rate and they would try and match it.

We thought this was ridiculous given that it was their own company offering this lower rate!

We decided to call another company we found online, get a quote from them and see if they would offer us a lower rate. We wanted to test this current lender to see if they would really match another lower rate from a different company. However, when Luke called this company the lady sold him right then and there by being so friendly and transparent with the process, how it worked and what to expect. She even offered us a lower interest rate than our current lender was offering. We were blown away at the fact that this new company, who didn’t know us at all, was treating us better than the lender we currently had for five years!

We decided to go with this new company and we are glad that we did. Learn from our experience and shop around for a lender that you feel comfortable with. Do not just assume that your current lender is the best way to go.

Minimize Surprises

Since we had never refinanced before we didn’t know how the process worked or which questions to ask. To be informed as much as possible and minimize surprises along the way, here are some questions you might want to ask:

How long should you expect the refinance process to take?
What are the fees associate with the refinance like appraisal fee, closing costs, etc? (If they are not already spelled out in the quote you received).
How does the closing process work with that particular company? Do they have you go in to an office to sign papers? If so, where is it located? Does the company or notary come to you?

The earlier in the process that you are informed of these things the more comfortable you will be and can plan ahead and accordingly.

Private Mortgage Insurance (PMI)

Don’t wait until you refinance to realize that you have met the threshold to remove your PMI. The following is just one way that PMI can be removed, which is provided under the HPA (Homeowners Protection Act):

“Under the HPA, the mortgage lender or servicer is required to drop your PMI when one of two things happens: The provider must automatically terminate PMI when your mortgage balance reaches 78 percent of the original purchase price, provided you are in good standing and haven’t missed any scheduled mortgage payments.”

Despite the HPA, our lender tried to give us the run around on why they did not automatically remove our PMI like they should have. You can’t leave this up to your lender. You have to be on top of it yourself. We didn’t check into this often enough and should have been able to stop paying our PMI many months if not years prior.

Important Advice: Check the value of your home early and often. If the value is increasing, this also increases the equity you have in your home. In turn, this can help you meet that threshold to remove PMI faster than simply just waiting until you pay your loan down. Be proactive!

To Summarize

Be sure to shop around for the right lender for you, minimize surprises by asking questions early in the refinance process to get yourself informed and be on top of ways you can drop your PMI as soon as you are eligible.

I really hopes this helps you if you are looking to refinance now or in the future. I know we didn’t know all of this before hand so I wanted to lend a helping hand out to someone else now that we have gone through the process ourselves.

Find Ashley Nicole on YouTube, Instagram, Twitter, Pinterest or by email: [email protected]