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Ways to doom your mortgage closing

By Holden Lewis ·
Monday, June 21, 2010
Posted: 4 pm ET

Today I highlight three ways to mess up your mortgage closing.

I just finished writing a sequel: five ways to mess up your refi. That should be published next Monday.

Not to steal my thunder, but I'll tell you the No. 1 way that homeowners doom their refinances: They overestimate their homes' values.

We are human, and it is our nature to overvalue the people and things that are close to us. We believe that all of our children are above average, and we often believe that our homes haven't lost value, even though every other house in the neighborhood has lost value. We like to think that we are the exception.

Sorry to burst your bubble, but if your neighbors' houses are worth less now than two years ago, your house is in the same situation. So before applying for a refi, make an informed estimate about your home's value. If you owe more than the house is worth, you're not going to be able to refinance.

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June 21, 2010 at 4:37 pm

FYI, both Fannie Mae & Freddie Mac have programs where borrowers can refi EVEN if they owe more than the home's value. The program is called "HARP."

FHA and VA permit a (streamline) refi w/o an appraisal at all.