When refinancing a mortgage, avoiding high fees is just as important as qualifying for a low interest rate. Many homeowners overlook fees when refinancing and sign for the first mortgage they qualify; these homeowners overpay for the financing of their new mortgages. Here are several tips to help you avoid paying too much when you refinance your mortgage loan.
Mortgage fees can add up to thousands of dollars, money that comes out of your pocket. Before you sign for a new mortgage you can ensure you get the best deal by carefully comparing loan offers.
Ask About Lender Fees and Closing Costs
When you comparison shop for a new mortgage it is important to compare all aspects of the loans, not just the interest rates. Ask your lender for the Good Faith Estimate of fees. Mortgage lenders are required to provide you this document upon receipt of your application; however, many will provide it to you upon request.
Use the Good Faith Estimate to compare all fees for the loans you are considering; do not rely solely on the Annual Percentage Rate (APR) as this will not have all of the fees found on the Good Faith Estimate. When you compare loan offers pay attention to how the loan offers are structured. Mortgages with the lowest interest rates typically have unfavorable terms such as balloon payments so it is important to pay close attention to loan terms.
When choosing a mortgage offer you want to pick one with favorable terms and low fees. You can learn more about finding the best mortgage for your financial situation without overpaying for the financing by registering for a free mortgage guidebook: “Mortgage Refinance: What You Need to Know.”