Mortgage Refinancing can save you a lot of money if you avoid costly mistakes. Rather than trying to predict future mortgage interest rates your time is best spent researching mortgage lenders and comparison shopping for the best loan. Here are three mistakes you need to avoid when mortgage refinancing to avoid overpaying.
I. Trying to Predict Lower Mortgage Interest Rates
Mortgage interest rates are extremely difficult to predict. No one can reliably predict or guarantee where interest rates are headed in the future. Anyone that tells you they can is selling something. Rather than trying to time the market, carefully comparison shopping mortgage offers will help you avoid 90% of the mistakes homeowners make when mortgage refinancing.
The Internet makes it easy to compare loan offers from dozens of online mortgage lenders and brokers. Be careful with the mortgage sites you choose and review the licenses and disclosure pages to avoid paying a Computerized Loan Origination fee. Many sites like Lending Tree will charge you as much as $1300 just for filling out a contact form on their website. These sites claim there is no fee for their services; however, reading the access and disclosure reveals your mortgage lender will charge you the Computerized Loan Origination fee.
III. Not Shopping For the Best Interest Rate When Mortgage Refinancing
Many homeowners make the mistake of choosing the first mortgage lender that approves their application. If you skip comparison shopping, you will not know what fair rates and fees are for a homeowner in your financial situation. Every mortgage lender has different criteria for evaluating your credit and quoting you an interest rate. If you request quotes from seven different mortgage lenders you will receive seven different interest rates. This is why comparison shopping is so important when mortgage refinancing.
III. Assuming the Lowest Interest Rate is the Best Deal When Mortgage Refinancing
Many homeowners mistakenly assume the mortgage offer with the best interest rate is the loan that will save them money. Choosing the wrong type of mortgage just because it has a great rate could result in overpaying thousands of dollars, it could even cost you the home. Choosing the best loan for your financial situation means choosing the mortgage with the right interest rate, term length, lender fees, and closing costs. You can learn more about comparison shopping for the best mortgage while avoiding costly mistakes by registering for a free mortgage tutorial.
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.
