Posted by Christine Baker on January 20, 1998 at 20:08:18:
In Reply to: Is it a good practice to keep refinancing your home loan? posted by David Nguyen on December 29, 1997 at 10:49:34:
There is absolutely NOTHING wrong with refinancing as long as it doesn't cost you anything.
Be sure that you don't have hidden costs added to the principal balance.
One thing to keep in mind:
If you keep refinancing a 30 year loan with a 30 year loan every few months, you'll NEVER pay off your loan. So you might want to add a few bucks to your payments. Check out Hugh's calculators linked on the Mortgage Page.
I'm glad to see that the radio/TV/newspaper financial advisors FINALLY dropped their idiotic advice, claiming that it's only good to refinance if the new rate is 2% lower. They must have been brainwashed by the bankers.
Back in the early 90's, wholesale lenders took huge losses due to brokers doing as your broker does. The wholesaler pays your closing costs and the broker's commission. If your loan is paid off 3 months later, they obviously lose thousands of dollars on your loan.
Some wholesalers even went after brokers, and I remember having to sign agreements holding me liable for their losses if I refi'd their loans again. But that was AFTER the rates had bottomed, and some wholesalers went out of business.
For details on No Cost loans check the Loan Shopping Page.
Christine