5 Manufactured Home Refinancing Mistakes
Refinancing a manufactured home can be a great way to
lower not only your interest rate but also your monthly payment. But
there are 5 mistakes that many people make that you need to avoid in
order to get the best deal for your financial situation.
1. Picking the wrong reasons for choosing a manufactured home lender.
Most people fail to look at the whole picture when it comes to choosing
a lender. That low interest rate that being dangled in front of you may
look good but there is more to consider then that. Many lenders try and
make up the difference from an offered low rate by charging extra fees.
To protect yourself from this practice be sure to get a Good Faith
Estimate from each lender you are thinking of doing business with. The
Good Faith Estimate will list all the closing costs and fees associated
with the loan, allowing you to choose the lender with the best deal for
you.
Don’t assume that your current mortgage lender will give you the best
deal either. Ask around among your friends and co-workers who may have
just refinanced and see if they have any recommendations for a good
lender. This doesn’t mean your current lender won’t have a good deal for
you but it pays to shop around. If you do find a better deal show it to
your current lender and see if they will beat it. In many cases they
will.
2. Trusting a loan officer who gives you nothing more then a handshake
and their word. Everything agreed upon should be done so in writing.
Someone’s word is worthless when it comes to loan contracts. If a low
interest rate is being guaranteed it need to be in writing.
3. Don’t ever attempt to refinance without knowing the appraised value
of your manufactured home. Not knowing its true value can lead to
problems further down the line. For instance borrowing more then the
home is actually worth. Being upside down on your mortgage is a bad
financial place to be. Most lenders require an appraisal and will role
the cost into the refinance, but beware of the lender that doesn’t ask
for one to be done. Know the value of your home.
4. Not doing the math on the refinance numbers can be a big mistake.
There is a definite cost to any loan and you need to see if it makes
financial sense. The big factor in determining the cost is how long you
plan on being in your home. If, for instance, you plan on staying in
your home for only 4 more years it may not make sense to do a loan
refinance. If the closing costs and fees are $4000 the monthly payment
will need to be lowered at least $83 per month for a savings of $1000
per year. If you are saving less then that, say $45 which is $540 a
year, then it doesn’t make sense to do the deal.
5. Look at taking out a second mortgage instead of refinancing the whole
amount. If you need some extra money a second mortgage can be a better
choice instead of adding to your overall mortgage. In most cases you can
pay down the second quickly, regaining the equity in your home in a much
shorter time period then if you add that extra cash to your first
mortgage.
There is a real cost involved when doing a mortgage refinance. Consider
these 5 manufactured home refinancing mistakes carefully and avoid to
ensure that you are making sound financial decisions.
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