With the current state of the housing market, many lenders are willing to do almost anything to generate business.  Many lenders are making promises that they cannot keep and that they probably never intend to.  Some lenders are not concerned with your best interest; they are only concerned with making money.

Please don’t buy lenders’ pitches that it’s easy to refinance. It may not be.

Home values may drop — leading to low appraisals that may disqualify you for new financing.

If you have a rising adjustable rate on the program, your mortgage balance also may be greater.

Refinancing may not cover your debt.

Plus, interest rates may be sky high when you truly need to refinance. Some programs also come with prepayment penalties.

So, if lenders are trying to bait you into getting a high priced loan with the hope of refinancing in the future, then you better run the other direction.  You should never take out a loan if you aren’t satisfied with all of the details of the loan.  Hoping for better rates or perks in the future by way of refinancing is never a safe bet.

By Philippe Volo


Compare Your Loans Contributing Editor