If you’re kicking around the idea of mortgage refinancing but aren’t sure if the timing is right, there is literally no time like the present. Today’s mortgage refi will not only bag you the best refinance rates of the year but could easily slash as much as $100 your payment. There a number of common mortgage mistakes you’ll need to avoid to prevent overpaying; however, don’t let this discourage you from refinancing. According to Frank Nothaft at Freddie Mac, more and more homeowners are refinancing and using today’s economic climate to reduce their debts.
Recent data show that consumers generally are shedding debt – and lowering or paying down their mortgages is just another way they’re doing it. Between 2007 and the fourth quarter of 2010, mortgage debt declined more than $400 billion, according to the Federal Reserve Board. With mortgage rates in the four percent range (the likes of which haven’t been seen in more than 50 years), many borrowers have refinanced their mortgages.
Avoiding common mortgage mistakes that result in overpaying fees like the loan origination fee is not difficult, simply doing your homework first makes mortgage refinancing a breeze. Here’sone important tip before you refi: beware yield spread premium when it comes to paying the person arranging your home loan. Recent changes to the laws regulating mortgage broker compensation prohibit the broker from charging you a mortgage origination fee and taking compensation from the lender for marking up your interest rate.
Yield Spread Premium is the fee lenders pay the person arranging your mortgage refi for locking and closing your home loan with a higher than necessary interest rate. This unnecessary markup results in a higher than necessary payment which means you’ll be overpaying for the entire duration of your home loan.
There are many other lender and broker junk fees you’ll want to avoid. The fees you pay when refinancing your home determine how good of a deal you’re getting because you’ll have to recoup these expenses before you realize any savings from your lower payments. Loan processing fees, rate lock fees, and broker fees all lengthen the amount of time it takes to recoup your expenses.
You can learn more about avoiding unnecessary fees and markup on your next home loan by checking out my free Underground Mortgage Refinancing Videos. These refi videos have been viewed by over 300,000 homeowners just like you and save the average person $1200 when refinancing.
My name is Rob Regehr and I’m a personal finance writer with a chip on my shoulder for banks and brokers that take advantage of my friends and neighbors.
