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Saving money isn't just for people looking to buy or rent. Current homeowners may want, or need, to pinch pennies too, which is why this month's "Real estate on the cheap" is dedicated to them.
We want to help you make your mortgage more affordable, but we're not going to give you any more checklists or calculators to help you figure out whether refinancing is worth it. That information is important, but it's everywhere. What many homeowners need – and aren't finding – is some idea of whom they can ask for help. So if you're considering refinancing to save money for a child's education, or think you may need a loan modification to keep a roof over your head, we'll tell you what help is out there – in the form of actual living, breathing human beings.
We'll also talk to a real-estate agent in New Orleans about what the market is like there and how to find a bargain in the Big Easy. (Bing: How to interview a real-estate agent)
Where to turn to see if you can save money
It's hard to miss all the news about falling interest rates on mortgages, including that the average for a 30-year fixed-rate mortgage dropped below 4% for the first time since Freddie Mac started keeping track in 1971. Maybe you're thinking you want to cash in on some of those lower rates.
The good news is that you probably have at least some clue what you're doing when it comes to getting a loan.
"The fact of the matter is refinancers have some advantage over homebuyers because they've actually been through the process before," says Keith Gumbinger, vice president of mortgage research firm HSH.
Your other advantage, if you've been in your home awhile and "started your financial life to a greater degree," as Gumbinger puts it, is that you've likely made contact with some professionals who can help you through the process.
Here are a few places you can go for advice:
- Your community bank. "If you have a relationship with a community or regional bank, it's a good idea to talk to them, because they typically know you and your area, and their business model is based on building personal relationships with customers," says Gloria Shulman, a Southern California mortgage broker and founder of Centek Capital Group. Even if your mortgage isn't financed through your community bank, it's likely someone there will be willing to give you some advice.
- Your financial planner. A financial planner who is familiar with your finances can help you work through various scenarios and examine your options to see what – if anything – you would save by refinancing.
- An attorney. "If you have an attorney you're comfortable with who is familiar with real-estate matters, you might spend some time and sit down with them," Gumbinger says. An attorney can also help you decipher any legal jargon once you get started on the process.
- Your accountant. The person who does your taxes has a lot of information about your financial background and can give you some idea how refinancing might change your tax picture.
Of course, most of these professionals probably charge you for their services.
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One place you can turn that won't charge you for advice: your current lender or servicer.
"That's not the only place to go, but it's probably where you're going to get the cheapest advice," says Keith Luedeman, CEO of goodmortgage.com.
Your lender may also be able to offer you a streamlined transaction with smaller fees than you would see if you switched providers, Gumbinger says.
Many lenders are used to helping customers make decisions. Luedeman says most of the customers who call to ask about refinancing don't know exactly what they want, but instead are looking for advice and options.
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"They want to retain your business, especially if you have good credit and are making payments on time," Gumbinger says. "But they may not be interested in offering the most rock-bottom interest rate. They're not willing to lose money to retain you."
That's why Gumbinger says it's essential to shop around and know what else is available.
Just remember: Unlike the loan you got when you bought your home, refinancing doesn't usually have an emotional side to it. It's all about money.
"When you are looking to buy a home, the loan is almost the tail of the dog," Luedeman says. "Refinancing is almost purely a financial decision."
So crunch those numbers, or find someone who can help.
Read: Could an ARM still be the right choice for you
Where to turn if you're in danger of losing your house
Making your mortgage payment more affordable does get emotional when it's a matter of saving your home. That's why it's essential to get help if you're trying to find a way to avoid foreclosure.
"Having someone to talk to about your options really may help clarify how best you should act," Gumbinger says.
The federal government has a list of foreclosure avoidance counselors, all of whom are free and approved by the Department of Housing and Urban Development. Beware of scam artists who may ask you to pay them to negotiate with your lender, or ask you to start sending your mortgage payment somewhere other than to your lender or servicer.
One of HUD's approved counselors, the nonprofit Neighborhood Assistance Corporation of America, helped Scott Merritt and his wife save their home in Loganville, Ga. An NACA counselor worked directly with Merritt's lender and pushed a modification through. He saved his home – and about $900 a month on his mortgage payment.
"None of it cost us anything but time and a little aggravation trying to get all the requisite paperwork in order," he says. "If we didn't find out about it, we would definitely have lost our house. Now we're in a much more comfortable situation."
His was a private loan modification done directly with the bank. That's not surprising, considering that private modifications are said to outnumber those going through the government's Home Affordable Modification Program, one of an array of programs implemented in an effort to help homeowners avoid foreclosure.
Many of those programs have been criticized for their mediocre success rates, but they may have provided templates for lenders and servicers to standardize and expedite their own processes, says Jeff Lischer, managing director for regulatory policy for the National Association of Realtors.
For example, the Home Affordable Foreclosure Alternatives program, in which a homeowner receives preapproved short-sales terms before listing the property, has rubbed off on at least one bank. Bank of America now has a "cooperative short sale" program that's modeled at least in part on HAFA.
"Some of the big lenders have looked at HAFA and said, yes, this idea of deciding upfront will save time in the short sale," Lischer says.
Whether you qualify for a federally subsidized program or not, you will need to go through your lender or loan servicer. That phone number is on your monthly mortgage statement.
You can find more information about the range of options offered through the government's Making Home Affordable program online.
