Mortgage Refinancing can lower your payment and slash the total cost of paying your home, unless you’re overpaying in the process. Getting the lowest refinance mortgage rates lenders like Amerisave are advertising can be tricky, and if you don’t manage to break even recouping your out of pocket expenses from taking out a new mortgage you’re losing money no matter how low your interest rate. Here are 7 tips before you refi to make sure you’re not overpaying one red cent for your next home loan.
- 1. Clean Up Your Credit
- 2. Shop Around
- 3. Watch Out For That Loan Origination Fee
- 4. Beware Discount Points
- 5. Don’t Pay to Lock
- 6. Take out the Trash
- 7. Streamline Refinance
This is huge. The refinance mortgage rates you see advertised are based on having a credit score of 820 or better. If your find the refinancing rates you’re being offered are coming in higher than what lenders are advertising the likely culprit is your credit. Visit AnnualCreditReport.com before you do anything and make sure your credit reports are accurate. You can improve your credit score by paying down the balances on your credit cards as much as possible before applying for mortgage refinancing.
Rates and fees vary widely from one loan originator and lender to the next so investing a little time shopping for the lowest refinance rates and fees can go a long way to reducing your out-of-pocket expenses.
The mortgage loan origination fee is paid to the broker or company arranging your mortgage refi. One percent is perfectly reasonable for the mortgage broker fee; however, it’s not uncommon for find brokers charging double this amount. Negotiate the origination fee down as much as possible as a condition of getting your business. Also, beware those no fee refinance offers as you’re always trading higher rates for having the fees paid for you.
This is a common trick lenders use to make their mortgage refinance offers seem better than they really are. At the end of last year refinance rates seemed stuck just over four percent for six weeks; however, many lenders like Wells Fargo Refinance and USAA Mortgage Rates suddenly offered three percent home loans. The trick buried in the fine print were discount points as a condition of qualifying. This means you’re essentially buying down your mortgage rate which raises your out-of-pocket expenses making it more difficult to break even recouping closing costs.
Mortgage Rate Lock fees are pure garbage. Threaten to take your business elsewhere or walk.
Watch out for unnecessary fees from the loan originator and lender. Application fees, processing fees, courier fees and rate lock fees are pure garbage you can avoid paying
If your current loan is a VA or FHA backed home loan don’t overlook FHA Streamline Refinance. (VA streamlines too) This essentially allows you to take advantage of today’s low mortgage refinance rates without paying many of the fees associated with refinancing. You may not even have to qualify based on your credit or document income.
You can learn more about avoiding unnecessary lender fees and markup when refinancing your home by checking out my free Underground Mortgage Videos.