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CNN Live Today
Tips on Refinancing a Loan
Aired June 17, 2003 - 10:14 ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
LEON HARRIS, ANCHOR: Joining us now to talk about the rally and what is ahead, hopefully, is CNN financial news personal finance expert Gerri Willis, joining us now from New York.
Morning, Gerri.
GERRI WILLIS, CNN FINANCIAL CORRESPONDENT: Hi, Leon.
HARRIS: All right. Tell us about these numbers we saw yesterday. How real was that?
WILLIS: Well, I think you've got to look beyond just yesterday and consider what's been happening over the last couple of months. We're in rally mode. We're in bull market mode, and I talked to financial advisors across the country. What they tell me is that their clients don't want to get into the market. They're still too scared and said they're sitting on the sidelines in money market accounts where their money is actually losing value.
So I think the best strategy here, you want to be fully allocated over all asset classes. You know, if you've been pulling away to the sidelines, it's time to start thinking about getting back in and making sure you've got the right amount of money in cash, bonds and stocks.
HARRIS: So this is not just for the institutional investor now? This is the time for the regular investors to start jumping back in, in your estimation?
WILLIS: Well, don't try to time the market, but I know a lot of people have been sitting on the sidelines.
HARRIS: All right. Well, let's get to the topic that we were originally bringing you on to talk about this morning, and that being, you know, everyone's out there trying to take advantage of these historically low interest rates right now. But people are finding that they're being stung by some of the closing costs when they go ahead and refinance their homes.
Let's start with your top five tips this morning on what folks should do if they're going to be closing on a new loan.
WILLIS: Well, before you do anything, you need some information. I always say start with the research. Go to Safeborrowing.com. This is a website that the American Bar Association puts together. It will give you all the information you need about the legal documents you're going to see, and that's where the fees are going to be described. HARRIS: All right. Next, get a good faith estimate of the closing costs, all right. How do you know how good a good faith estimate is?
WILLIS: Well, you know, it's not always great. I've got to tell you, you're absolutely right, Leon. They don't always stick to this guide. But at least it is a guide and it's one that the lenders -- it's a document the lenders give you three days after you file your application for the loan. And it will break out the costs. Sit down with your lender, ask them to go over each and every fee with you so you know exactly what you're paying.
HARRIS: And you find out about any junk fees in advance?
WILLIS: Sure, but they're not going to be called junk fees in the documentation.
HARRIS: OK. I'm sure the bank wouldn't want to call their own fees junk fees.
WILLIS: Right. Well, they're called transportation fees or maybe documentation fees. And this is where the lender builds in some costs to cover his own costs, and where you can say, "Hey, I don't want to pay that."
HARRIS: And you say do not fall for these no-cost come-ons that you see in a lot of advertisements. Why not?
WILLIS: Well, you know, they're going to build those costs in somewhere and the problem is, you're not going to be able to tell how much those costs are, because they won't be disclosed. So you're better off understanding exactly what you're paying for and getting that good faith estimate of closing costs.
HARRIS: All right. And to round things out, get a settlement statement up front before you close.
WILLIS: That's right. This is yet another document that's going to list all the fees you're paying. But this one will allow you, if you get this document, you'll be able to protest those fees at the last minute.
And remember, in a refi you can protest fees after you've signed the documentation, up to three days. Lenders are so busy right now that they're very likely to say, "Hey, we'll take that off. We've got to do another deal right behind you."
HARRIS: There you go. And it's easy for you folks to negotiate with your feet. Just get up and walk out and go someplace else.
WILLIS: That's right.
HARRIS: All right. Thanks, Gerri. Gerri Willis in New York, as always. Good to see you.
WILLIS: Thank you. TO ORDER A VIDEO OF THIS TRANSCRIPT, PLEASE CALL 800-CNN-NEWS OR USE OUR SECURE ONLINE ORDER FORM LOCATED AT www.fdch.com
Aired June 17, 2003 - 10:14 ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
LEON HARRIS, ANCHOR: Joining us now to talk about the rally and what is ahead, hopefully, is CNN financial news personal finance expert Gerri Willis, joining us now from New York.
Morning, Gerri.
GERRI WILLIS, CNN FINANCIAL CORRESPONDENT: Hi, Leon.
HARRIS: All right. Tell us about these numbers we saw yesterday. How real was that?
WILLIS: Well, I think you've got to look beyond just yesterday and consider what's been happening over the last couple of months. We're in rally mode. We're in bull market mode, and I talked to financial advisors across the country. What they tell me is that their clients don't want to get into the market. They're still too scared and said they're sitting on the sidelines in money market accounts where their money is actually losing value.
So I think the best strategy here, you want to be fully allocated over all asset classes. You know, if you've been pulling away to the sidelines, it's time to start thinking about getting back in and making sure you've got the right amount of money in cash, bonds and stocks.
HARRIS: So this is not just for the institutional investor now? This is the time for the regular investors to start jumping back in, in your estimation?
WILLIS: Well, don't try to time the market, but I know a lot of people have been sitting on the sidelines.
HARRIS: All right. Well, let's get to the topic that we were originally bringing you on to talk about this morning, and that being, you know, everyone's out there trying to take advantage of these historically low interest rates right now. But people are finding that they're being stung by some of the closing costs when they go ahead and refinance their homes.
Let's start with your top five tips this morning on what folks should do if they're going to be closing on a new loan.
WILLIS: Well, before you do anything, you need some information. I always say start with the research. Go to Safeborrowing.com. This is a website that the American Bar Association puts together. It will give you all the information you need about the legal documents you're going to see, and that's where the fees are going to be described. HARRIS: All right. Next, get a good faith estimate of the closing costs, all right. How do you know how good a good faith estimate is?
WILLIS: Well, you know, it's not always great. I've got to tell you, you're absolutely right, Leon. They don't always stick to this guide. But at least it is a guide and it's one that the lenders -- it's a document the lenders give you three days after you file your application for the loan. And it will break out the costs. Sit down with your lender, ask them to go over each and every fee with you so you know exactly what you're paying.
HARRIS: And you find out about any junk fees in advance?
WILLIS: Sure, but they're not going to be called junk fees in the documentation.
HARRIS: OK. I'm sure the bank wouldn't want to call their own fees junk fees.
WILLIS: Right. Well, they're called transportation fees or maybe documentation fees. And this is where the lender builds in some costs to cover his own costs, and where you can say, "Hey, I don't want to pay that."
HARRIS: And you say do not fall for these no-cost come-ons that you see in a lot of advertisements. Why not?
WILLIS: Well, you know, they're going to build those costs in somewhere and the problem is, you're not going to be able to tell how much those costs are, because they won't be disclosed. So you're better off understanding exactly what you're paying for and getting that good faith estimate of closing costs.
HARRIS: All right. And to round things out, get a settlement statement up front before you close.
WILLIS: That's right. This is yet another document that's going to list all the fees you're paying. But this one will allow you, if you get this document, you'll be able to protest those fees at the last minute.
And remember, in a refi you can protest fees after you've signed the documentation, up to three days. Lenders are so busy right now that they're very likely to say, "Hey, we'll take that off. We've got to do another deal right behind you."
HARRIS: There you go. And it's easy for you folks to negotiate with your feet. Just get up and walk out and go someplace else.
WILLIS: That's right.
HARRIS: All right. Thanks, Gerri. Gerri Willis in New York, as always. Good to see you.
WILLIS: Thank you. TO ORDER A VIDEO OF THIS TRANSCRIPT, PLEASE CALL 800-CNN-NEWS OR USE OUR SECURE ONLINE ORDER FORM LOCATED AT www.fdch.com
