Refinancing Rules And Suze Orman’s 9 Steps To Financial Freedom

Refinancing rules – the dos and don’ts of refinancing your home. We’d like to think that as consumers we could shop around a couple of mortgage lenders and be quite sure that our interests were being looked after by the friendly bank manager. Sadly, those days are long gone, and every consumer has to be their own guardian and protector. Hence these refinancing rules.

Rule 1

It always costs more.

Take whatever the lender or broker quotes you, and add a margin.

Add an amount to the monthly payment for account-keeping fees, service fees, late fees, clearance fees, bank transfer fees, and fees for calling in or visiting a branch to question the fees.

Then also budget for a whack of cash at the time you actually refinance. This will cover application fees, valuation fees, broker commissions, inspection fees, title transfer fees, legal fees, stamp duties, registration fees, account closing fees, account opening fees, mortgage discharge fees, administration charges, copying charges, and “refinancing on the third Monday after the full moon” fees.

Rule 2

You always get less.

Assume any rosy picture painted by a broker or ban representative exaggerates the good bits and understates the effort it will take you.

That lump of cash you are going to get when you do that cash-out refinance? Subtract 10% for random fees, charges, taxes, tariffs and service charges.

That line of credit you are going to have against the equity in your home? Make allowances for a nibble away at it each month in account-keeping fees and “credit you are not using” charges.

That debit card they gave you? It will cost you each time you use it outside their automatic teller network.

And the carry-bag with the lender’s logo on it will break within days.

Rule 3

It always takes five times a much effort as you think.

Just supply a photocopy of your mother’s maiden shoe size and documentary evidence of every time you have opened a window since you bought the house. Oh, and don’t forget references from seven people who haven’t seen you file for bankruptcy this week.

The valuer will want to look in the attic, or they will never send in their report and you will have to get another valuer, paid for by yourself of course, because the bank already paid for one.

Then the valuation will come in too low and you will need to start over with another lender, who doesn’t care for the quality of the photocopy of your mother’s maiden shoe size and wants a certified copy anyway.

Rule 4

It always takes longer.

You will actually find it difficult to get banking types to give you a real estimate of how long refinancing might take.

There is a good reason for this – it’s because they know that the moment they definitively state a timeframe, the universe will distort, warping time and space, to ensure the it takes two weeks and two days longer than any previous estimate given, even if the previous estimate included the two weeks and two days.

The best you can hope for is something along the lines of “once the paperwork is completed and the valuation is done it will be five to twelve working days …”

Bearing in mind that the correct paperwork requires a certified copy of your mother’s maiden shoe size and a sample of your dog’s nose hair, and that “working days” means working days in banking time, not the commonly-misperceived meaning of “working days” as being the days of Monday through Friday, and you can see why this process can drag on somewhat interminably.

But of course the delay is all your fault until you have found a leprechaun to certify the photocopy and bless the nose hair.

And after that it’s not delay, it’s just your ignorance of the true meaning of the words “working day”.

Rule 5

Nobody will ever tell you all the rules.

There is a rule five, but if we publish it, we’ll never be able to use a leprechaun in the industry again.

So, there you have it. The refinancing rules, or the best approximation of them you will get without knowing the secret bankers’ handshake.

You may want to gain the benefits of refinancing your home, but if you do, remember that you will have to navigate the depths of the banking world with only the vaguest knowledge of the refinancing rules. Just be glad – you are now well ahead of the average borrower, who is going in blind, like a lamb to the slaughter.

By the way, if you’re seriously interested in getting ahead financially, read the article I wrote about Suze Orman’s 9 Steps To Financial Freedom for Emergency Refinancing.

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