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Many people are jumping into the refinance wave hoping that it will wash them up on the shores of prosperity once more.  While there are many that can benefit by refinancing into a lower rate, media hype about lower rates may cause some to pursue refinance when it isn’t cost effective for them.  The ‘rule of thumb’ for refinancing is that if you can save a point or more in interest and you plan to be in the home for at least another 2 to 5 years, it can be cost effective.  Other factors can make refinancing cost effective and you should review your particular scenario with an experienced mortgage professional to learn all your options and weigh them carefully to determine what’s best for you and your situation.

One the most misunderstood aspects of a refinance is the recission period.  Federal regulations require that any refinance on a personal residence have a three day recission period.  The recission period must be completed before the new loan will fund.  The important aspect of this recission period is it a time for you to reflect on the terms of the new loan and be sure that they’re right for your mortgage needs.  If at anytime during the 3 days you determine that the new loan terms will not meet your needs or are not what you were expecting, simply sign the recission document provided by the closing agent and returning to the closing agent before midnight on the 3rd day, and you void the new loan.  It is important to stress that if you exercise your right of recission you are relieved of any liability of the costs of the new loan.

If you sign the recission request and return it to the closing agent within the 3 days, you can not be charged for any of the costs of the new loan.  It is very important to be certain your current mortgage has been paid timely. Many people when refinancing presume their current mortgage will be paid off with the refinance and they can avoid making the payment that month.  This can lead to late payments being reported on your credit.  Since one late mortgage payment can drop your credit scores over 100 points or more, it isn’t a good risk to take.  Keep your current mortgage paid timely even during the refinance process.  If anything unexpected or circumstance causes the refinance to be delayed or cancelled, you won’t risk being in arrears with your current lender or having a late payment reported on your credit.