What You Don't Know about Refinancing Can Hurt You

Trump University President Michael Sexton interviews EJ Ridings, President of Trump Mortgage

Most people refinance their homes when they need a large sum of money to install a new kitchen or pay college costs. But there are right and wrong ways to refinance, as we'll learn in the following conversation between Trump University President Michael Sexton and EJ Ridings, President of Trump Mortgage, one of the fastest-growing lending institutions today.

Michael Sexton: I just read an article that described homeowners who use their homes like --cash registers--

EJ Ridings: In general, there are three reasons to refinance your mortgage. First, to lower your monthly payments. Second, to get your mortgage paid off faster. And third, to take cash out of your property.

But your --cash register-- point is well taken. Refinancing is never a decision to be taken lightly. The term of your mortgage, prevailing interest rates, and a number of other factors need to be taken into account. I would encourage anyone who is thinking about refinancing to visit Trump Mortgage's website, [http://trumpmortgage.com/], to use our array of refinance analysis tool to weigh those factors.

MS: What are typical closing costs and expenses? And how can you get an accurate picture of them before you go into your closing?

EJR: Costs and fees fall into three categories:

• Lender fees may include origination, application fees, points, appraisal, and credit report.
• Third-party fees vary according to state and the company you choose to close your loan. They may include fees for closing, title insurance, title exam and recording.
• Pre-paid items are due at the time of closing, but are sometimes not considered closing costs per se. They may include taxes, interest, hazard insurance and other items you might have to pay for, whether you are refinancing or not.

Altogether, closing costs usually range from 2 percent to 3 percent of your loan amount. You will be given an estimate of your closing costs shortly after your mortgage application has been received. However, the actual fees and figures you see on that statement can change by the time you get to your closing. Any prepayment penalty on a loan being refinanced, for example, will raise the amount needed to close. If you change the product type or loan amount, the closing costs will obviously change too. So before you arrive at the closing, be sure to ask your attorney or closing company how such changes will affect your closing costs. There may be ways to keep them under control. If there is enough equity in your home, for example, your closing costs may be rolled into your new loan amount to keep your out-of-pocket costs as low as possible.

MS: Typically, how much equity do you need to have in your home in order to refinance?

EJR: Most refinance loan programs require at least 10 percent.

MS: On our Trump University blog and Discussion Boards, people sometimes ask whether they can refinance while their homes are for sale. Perhaps they need that money to make a down payment on another property. Is that possible?

EJR: You cannot refinance while your home is for sale. But as long as your home has not been for sale within the last six months, you can refinance.

MS: How does a refinancing closing differ from a closing for a first-time mortgage?

EJR: The refinance closing is handled the same way your loan was closed when you originally purchased your property. At closing, after your loan is approved, you'll be getting copies of documents you'll need to sign. The closing takes place at the office of a closing agent or it may involve a meeting where all related parties are present.

Michael Sexton, President of Trump University, interviewed EJ Ridings, President of Trump Mortgage. Trump Mortgage's new websiteoffers printable mortgage forms, online mortgage analysis tools and a variety of other free resources. Or call Trump Mortgage at 1-888-79-TRUMP for a no-obligation consultation.

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