If you are in the market for a new mortgage or are refinancing your existing mortgage, there are a number of mistakes you should be aware of. Here are three common homeowner mistakes that could cost you thousands of dollars when refinancing your home loan.
I. Don’t Count on Rising Home Values
Many homeowners assume the value of their homes will go up enough to give them instant equity. While home values have seen unprecedented appreciation over the last several years, it doesn’t mean this trend will continue in the future. Some parts of the country have even seen depreciation in values of their homes. When you choose a mortgage loan make sure the loan is in line with property values in the neighborhood you are purchasing. Predatory mortgage lenders often try and trick homeowners into borrowing more than they actually need to make the loan harder to pay back. These lenders do this to promote foreclosure so they can take your home.
II. Shop from a Variety of Mortgage Lenders
Some homeowners only shop from local mortgage companies or their bank when taking out a home loan. If you take out a mortgage with your local bank or mortgage companies you will be overlooking loan offers from dozens of internet mortgage lenders that offer highly competitive rates.
II. Not Comparing All Aspects of the Loans
When you comparison shop for a mortgage it is important to compare all aspects of the loans offers, not just the interest rates. Many homeowners rush through the process of refinancing and accept the first favorable loan they are approved for without comparing lender fees and closing costs. These borrowers often overpay thousands of dollars for their financing. There is a document your mortgage lender will provide that allows you to quickly compare all lender fees and closing costs to determine which loan is best. To learn more about comparison shopping for the best loan register for our free mortgage guidebook.