With mortgage rates currently at record lows, it is a good time for a lot of homeowners to look into a mortgage refinance. However, use caution, refinancing a home is a very serious decision to make and should not be taken lightly The list below contain the 3 most common, and most expensive mistakes you can make.

3 Common and expensive refinancing mistakes:

-Refinancing your home at a high interest rate.
Take careful consideration about the rate offered to you to refinance. Generally it needs to be at least 1.5% or lower than your current rate. So unless you can get a new interest rate lower than your current rate, a refinance may not be the right decision. Unless you have no choice, do not refinance at a higher or same interest rate.

-Borrowing too much money.
People commonly borrow too much money when they refinance. Always remember that anything you borrow, still needs to be paid back at some point. Do not put your home at risk by borrowing big money, then owing big payments, and not being able to pay one month. This endangers your home, and will hurt your credit.

-Not accounting for closing costs and associated fees.
You will have to pay some type of a closing cost or fee when you refinance. That exact amount depends upon which lender you choose. It can cost anywhere from hundreds to thousands of dollars depending on the loan amount and type. You can usually include these fees into the total amount of the loan. That however, is not a smart decision. You will be paying interest on those closing costs monthly for the length of the loan. It is better to pay all or most of the fees upfront in order to avoid this.

-M Petrone


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