One of the most common mortgage mistakes when refinancing is overpaying at closing. Understanding your Good Faith Estimate and HUD-1 Settlement Statement is frustrating for even the most seasoned homeowners. Here are several tips from Dan Green on HSH.com to help decipher lender fees and closing costs:
There’s no doubt that mortgage settlement statements can be confusing to the layperson. There are no instructions to explain the forms, and the document bears little resemblance to the Good Faith Estimate. For all of its line-item fields, though–and there are 143 of them(!)–the areas that tends to confuse homeowners the most are the ones collectively known as “prepaid items.”
The fees you pay closing on your mortgage refi are so important because you have to recoup these expenses before you’ll benefit from lowering your mortgage rate and payment amount. The more you pay at closing the longer it’s going to take to break even.
One of the most common mortgage mistakes is not negotiating the loan origination fee. Remember this fee is located on line 801 of your settlement statement. This is the fee you’re paying the person arranging your mortgage refi and keep in mind is completely negotiable. Shopping for the right person to arrange your home loan is the best way to approach getting the lowest refinance rates while avoiding unnecessary fees.
You can learn more about avoiding unnecessary lender fees while getting the lowest refinance rates by checking out my free Underground Mortgage Videos.