Mortgage rates have plummeted to near record lows across the country. As a result, a record number of homeowners have looked into a mortgage refinance. Refinancing your mortgage could be a great decision that saves you thousands just be sure to not make the common mistakes many homeowners have made. I have listed here the 8 most common mortgage refinance mistakes homeowners make when refinancing. Hopefully after reading this you will not make a costly error that could have been avoided.

Common Mortgage Refinance Mistake #1
Not performing enough research on potential lenders when looking at refinancing. A lot of homeowners are comfortable with their current mortgage lender or bank. A lot do not even know that you can refinance with a different mortgage lender all together. Go to your preferred mortgage lender first and get a quote on paper. After you get that quote shop it around to other mortgage lenders you have researched. This puts pressure on the mortgage lender you bring the competitors quote to to match or beat it. It pays to comparison shop around as even a little difference in rates can mean a big amount in savings.

Common Mortgage Refinance Mistake #2
Not knowing how long until you break even after a mortgage refinance. There almost always closing costs or other fees associated with refinancing a home mortgage. These costs are often expensive ($2,000-$4,000) and could cancel out the savings on the interest rate if you do not pay attention. Make sure you do the calculations and know when you will break even after refinancing. Do not forget to add fees and any closing costs into your calculations.

Common Mortgage Refinance Mistake #3
Not receiving a good faith estimate from a potential mortgage lender. Once you get a quote you like almost any mortgage lender or bank should be able to give you what is called a good faith estimate. A good faith estimate should include all closing costs and fees that may be associated with refinancing a mortgage. Usually the lender is able to provide this for you within 3 working days but a lot of the time a lender can give you one on the spot.

Common Mortgage Refinance Mistake #4
Do not take the assessed value of the property into consideration. This value is determined by your local tax assessor. He is not an expert in market level home appraisals. You should value your property with another method called the sales commission method, also referred to as the cost approach. Instead ask your mortgage lender to use the AVM (Automated valuation model) method to get a value of your home. This method uses the recent sales of other homes in the area to get a value for your home. This method finds a good going rate for homes in almost any area of the country.

Common Mortgage Refinance Mistake #5
Make sure to double check and ask questions about any documents before signing them. Make sure you understand all the terms conditions, and rates that you are getting yourself into before you sign. If you have any questions make sure to ask. This way you can make sure nothing has changed that will cost you more money than you anticipated you would spend.

Common Mortgage Refinance Mistake #6
Make sure you have and provide all necessary documents in a timely fashion. This will make sure that any delays that you can control are avoided and the rates you locked in stay the same. Often the rates can fluctuate in the time between knowing what documents you need and actually bringing them in. Do not let a lot of time pass in between.

Common Mortgage Refinance Mistake #7
Make sure to get everything in writing. There are plenty of people who are trustworthy in the mortgage industry but make sure their word is good by getting anything you like and are quoted in writing, better yet in writing on the mortgage lenders letterhead and signed. If the talked about terms rates and conditions are not in writing, they are not binding or official in any way.

Common Mortgage Refinance Mistake #8
Do not use a heloc before applying for refinancing. If you have used the equity in your home to take out a loan for anything except for home repairs or improvements than do not apply for a mortgage refinance right away. Wait at least half a year before seriously looking into a mortgage refinance. Also, do not take out more credit or extend your existing credit any further than necessary before mortgage refinancing.

Mistakes when refinancing a home mortgage loan can cost you thousands of dollars, huge headaches, wasted time, and possibly your home. Do all the research you can before actually refinancing and make sure you are certain before doing anything. Use websites like mine to find potential mortgage lenders like on top of my page.

-M Petrone
RefinancingCondo.com

Subscribe via email

Enter your email address:

Delivered by FeedBurner