This New Company Wants to Help You Avoid a Common Mortgage Mistake
If you’re like most of us, your home is your most expensive possession, and your mortgage is your biggest monthly expense. Refinancing could save you money — but it’s not always the best move.
To avoid being misled, manipulated or ripped off, here are a couple of things to consider before signing up with a new lender.
Talk to Your Current Mortgage Loan Servicer First
Most homeowners looking to refinance will shop around for a new lender, and they never even think of talking to their current mortgage loan servicer, says Tim Allen, a veteran mortgage banker, and founder and CEO of aboutMYmortgage, which he co-founded with Florida attorney Edward Wollman and veteran mortgage marketing professional Mauro Appezzato.
Here’s the thing: You might be getting all these sweet-sounding refinancing offers in your mailbox, but you’re probably not getting a refinancing pitch from the company that you make your payments to right now.
But it’s worth your time to talk to your current mortgage loan servicer. It may be able to refinance your mortgage at a considerable savings compared with what you’d get switching to a new lender.
And because the current mortgage loan servicer already has your loan information, refinancing this way can be quicker, easier and cheaper.
Is Refinancing Your Best Move?
You might have other options refinancing companies aren’t telling you about.
“A mortgage loan originator only gets paid a commission if he convinces you to refinance — not if he tells you to get a home equity loan,” says Allen.
If you’re looking to cash in on the rising value of your home, for example, it might be smarter to take out a home equity loan. While refinancing pays off your existing mortgage and replacing it with a new one, a home equity loan allows you to borrow against your home’s value.
Crunch the numbers first to figure out what’s best for you.
But that’s not the advice you’re going to hear from someone whose job is to sell you a whole new mortgage.
“Be careful of ulterior motives when you’re getting advice,” said Allen. “If you go to a mortgage office, they’re not going to tell you about home equity loans.”
An Easy Way to Get the Information You Need
The entrepreneurs behind aboutMYMortgage want to help you make the most informed decision possible.
Instead of foisting you off on an aggressive loan salesman, they’ll hook you up with a customer care specialist at your existing mortgage loan servicer. That person will be able to give you useful information about your existing mortgage and all of your options — refinancing, a home equity loan or line of credit, or a mortgage modification.
“It may seem like it’s an obvious thing to do,” says Allen, “but this is something that’s never been done before.”
Here’s how aboutMYmortgage works:
- Enter the name of your mortgage servicer. This is the company that currently holds your mortgage. (It’s who you make your payments to.)
- Tell them what you’d like to do. Let aboutMYmortgage know what you want to talk to your mortgage loan servicer about — refinancing, home equity loans, mortgage modification or a new home purchase.
- Get a call from your mortgage servicer. Once aboutMYmortgage sends your request to the servicer, someone with the company will call you to answer your questions and figure out next steps.
“Our whole deal is empowering homeowners,” says Allen. “That’s our mission.”
The company doesn’t make any money from consumers like you. Instead, it makes its money from mortgage loan servicers who pay the company to help with customer retention. In other words, your current mortgage holder will pay the company a commission for referring your business back to them instead of to a competing lender.
The company’s service is available in Arizona, Arkansas, Colorado, the District of Columbia, Delaware, Florida, Iowa, Idaho, Illinois, Indiana, Kansas, Kentucky, Louisiana, Massachusetts, Maryland, Minnesota, Nebraska, New Jersey, New Mexico, North Dakota, Ohio, Oklahoma, Oregon, South Dakota, Tennessee, Texas, Virginia, Washington, West Virginia and Wyoming.
Allen says it has been signing agreements to partner with some of the biggest mortgage servicers in the U.S. It’s also partnering with Spring EQ, a home equity loan provider that does business nationwide.
If aboutMYmortgage is not partnering with your mortgage loan servicer yet, you can ask the company to let you know when they are, or one of their other in-network servicers will try to assist you.
Avoid a Major Financial Mistake
Sometimes refinancing your mortgage makes financial sense.
But in other cases, starting over with a brand new loan just means paying more or pushing back the day when you can pay off your mortgage for good. The goal of aboutMYmortgage is to help you avoid that mistake.
“What’s missing now is that you don’t have somebody who’s actually giving you a consultation,” says Allen. “You don’t have that when you’re talking to a loan originator, although you think you do.”
Mike Brassfield ([email protected]) is a senior writer at The Penny Hoarder. He could use a mortgage modification.