If you’re considering a mortgage refi for your existing home loan there are several things you must know to avoid overpaying. The mortgage refi process is filled with banker fat cats vying to make a buck at your expense. Overpaying usually results in paying a hundred dollars or more per month than you should be; add to this the junk fees that brokers and lenders try to slip in and you could easily be out thousands of dollars every year for no good reason. Here are several of my best mortgage refi secrets that promise to save the average homeowner $1200 per year from unnecessary markup and junk fees.
Mortgage Refi Pitfalls to Avoid
The biggest pitfall that you need to know about is the trap of comparison-shopping. How can comparison-shopping be a bad thing you ask? Simply put most homeowners, including nearly all your neighbors rely on incomplete or just plain false information provided by lenders in the form of the Good Faith Estimate (GFE) and the Annual Percentage Rate (APR). The problem with your Good Faith Estimate is that it is simply an estimate provided by the lender in “good faith.” Mortgage lenders routinely low-ball the fees provided in these estimates because there is no accountability under the Real Estate Settlement Procedures Act (RESPA).
What about the Annual Percentage Rate (APR) you ask? After all the APR is mandated by Truth-in-Lending laws that banks and lenders can’t skirt. Well, when it comes to home loans the APR you receive is based on the figures in the Good Faith Estimate which we already know lenders routinely low-ball. The Annual Percentage Rate is just as worthless when comparison-shopping as your Good Faith Estimate. This is why nearly all your neighbors that approach their mortgage refi hell-bent on comparing every Good Faith Estimate they can get their hands on still overpay thousands of dollars every year.
How to Pay Less for Your Mortgage Refi
You can put thousands of dollars back in your pocket on your mortgage refi simply by avoiding unnecessary markup and junk fees. Sounds difficult, right? It’s easier than you think and you don’t even have to be a personal finance guru to pull it off. Rather than focusing on comparing mortgage refi quotes like your neighbors did until they can’t see straight all you have to do is concentrate on finding the right person to arrange your mortgage refi. This is easy-peasy I promise once you once you know how to go about it.
Avoiding Mortgage Refi Markup
For the purposes of this discussion, I’m only talking about home loans that are arranged by mortgage brokers. I never recommend banks when refinancing because your bank is exempt from the Real Estate Settlement Procedures Act and banks routinely exploit this loophole to bolster their profits at your expense. I mean why would you ever consider taking out a mortgage refi loan with a lender that doesn’t have to play by the rules? You simply wouldn’t.
This doesn’t mean that brokers don’t play dirty when it comes to your mortgage refi which is why it’s so important to find the right broker to arrange your home loan. How do brokers play dirty when it comes to your mortgage? There’s a little known fee paid by mortgage lenders to any broker that locks and closes mortgage refi loans with a higher than necessary interest rate. Avoid this unnecessary markup of your interest rate and you’ll bag yourself a wholesale mortgage rate and keep thousands of dollars of your hard-earned cash in your pocket every year.
Here’s a quick sample to get you started today by exposing your mortgage refi lender’s dirtiest secret.