Are you considering refinancing your home loan but aren’t sure if a new mortgage loan is a good idea at the moment? Refinancing can save you money on your mortgage payment every month with lower mortgage rates; however, most of your neighbors overpay for their home loans because of unnecessary markup and junk fees. Here are several tips to help you answer the question Should I Refinance My Mortgage while avoiding paying too much for your next home loan.
Should I Refinance My Mortgage Loan?
Mortgage rates are once again at all-time lows. If you missed out the last time mortgage rates fell below 5% now is your chance to lock in a great rate. There are many reasons for refinancing your home mortgage and it doesn’t always have to be to get a lower payment amount. In fact, many homeowners refinance to consolidate higher interest debt or borrow cash against home equity. In these cases it is not uncommon to walk away with a higher mortgage rate and payment amount after refinancing; although, with today’s lower mortgage rates you may be able to pull it off without too much of an increase in your payment amount.
Beware Bad Advice and Junk Fees
There is of course a lot of bad advice on the Internet when it comes to anything; one bit of bad mortgage advice you’re likely to encounter is the so called two percent rule of mortgage refinancing. This “rule” states that you should not refinance your home mortgage unless the new mortgage rate is two percent lower than your existing mortgage loan. As we’ve already discussed there are perfectly valid reasons for refinancing your home loan with a higher mortgage rate than you currently have. If your goal is to refinance for a lower mortgage payment it makes more sense to base your decision on the amount of time it will take you to recoup your expenses from refinancing. Your expenses come in the form of closing costs which you will recoup from your savings with the lower mortgage payment. If you can live with the amount of time it will take you to recoup these expenses than it makes perfect sense to refinance in your situation.
What About Mortgage Junk Fees?
Once you’ve answered the question Should I Refinance My Mortgage you’ll want to avoid paying junk fees to keep your closing costs as low as possible. One of the most common junk fees you’ll encounter from nationwide lenders such as Quicken Loans is the mortgage rate lock fee. Wholesale mortgage lenders never charge a fee for locking in your mortgage rate. If your mortgage broker or “direct lender” is quoting you a fee for locking in your mortgage rate it is pure garbage and serves no purpose other than to boost their profit margin at your expense. There are a number of other mortgage junk fees you need to be aware of such as courier, administrative, and excessive loan processing fees. For a detailed explanation of mortgage junk fees and steps you can take to avoid them check out my free underground mortgage refinancing videos.
Unnecessary Mortgage Rate Markup
Once you’ve answered the question Should I Refinance My Mortgage for yourself you’ll need to find a home loan that doesn’t include unnecessary markup of your mortgage rate. Banks, direct lenders, and mortgage brokers all markup mortgage rates to boost their profits at your expense. The markup goes by several different names including Yield Spread Premium and Service Release Premium; however, the end result is always the same: your mortgage payment is higher than it needs to be.
You can avoid all of this mortgage rate markup nonsense by finding the right person to arrange your home loan when refinancing. Mortgage shopping isn’t about comparing loan offers unit you can’t see straight…that’s what your neighbors did and they overpay an average of $1200 every year. If you concentrate your efforts on finding the right person for your next home loan you’ll avoid all of the unnecessary markup and mortgage junk fees that according to the Secretary of Housing and Urban Development will result in homeowners in the US overpaying sixteen billion dollars this year alone.
You can learn more about answering the question Should I Refinance My Mortgage for yourself while avoiding unnecessary markup and junk fees by checking out my free underground mortgage refinancing videos.
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