I had a couple come through yesterday's Open House who talked about refinancing a loan on their house. They had done this before, and didn't seem concerned, but times are changing, and would-be refinancers are finding it harder to get new loans.
Some things to watch for:
Loan Fees. Experienced borrowers are used to origination fees that can total an average of nearly 2% of the loan amount...many of which are hidden in the so-called "no cost" loans. Be sure to check the APR, or annual percentage rate, in comparing mortgage offers. Also watch for a prepayment penalty...a fee of up to 3% may be written into your loan documents. A good way to compare offers is to use the refinancing calculator on bankrate.com.
Higher Rates. Lenders are getter tighter on their requirements, so get your credit cards debt down, and check out your credit score. You should also expect a higher interest rate as some lenders struggle to cover their losses.
Tougher Appraisals. Many bank appraisers are doing "drive by" appraisals, and may not give you credit for recent upgrades. Make sure that a thorough appraisal is done, and that the best comparable sales are used.
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