Are you searching for tips on how to refinance with the best mortgage lenders without getting taken to the cleaners? Mortgage refinancing has great potential to lower your payments, saving you cash at the end of the month; however, one common mistake is focusing only on getting the lowest payment at the cost of fees. Here are several tips on how to refinance without paying unnecessary fees at closing.
How to Refinance for Beginners
There’s no silver bullet when it comes to getting tips on how to refinance. Everyone wants the lowest refinance mortgage rates for their home loan; however, are big companies like Amerisave really going to give you the best deal? Many new homeowners considering mortgage refinancing are frustrated to find the interest rates they’re being quoted from lenders like Wells Fargo Refinance are higher than what they see advertised on TV. This is because the advertised rates you see on television are based on having a lofty credit score of 780 or better. The interest rates you’re quoted when shopping for mortgage refinancing take your credit score and loan-to-value-ratio into consideration as lenders charge you based on what they think is your risk of default.
Improve Your Credit Score, Improve Your Mortgage Rates
The most effective tip I have on how to refinance is to take a week before applying and work on your credit score. Improving your credit score isn’t as hard as you might think and you don’t have to be a personal finance guru to understand how credit works. The first thing you should do before mortgage refinancing is check your credit reports for mistakes. The website AnnualCreditScore.com offers free access to all three credit reports once per year. If you find mistakes while reviewing your credit files it’s important to dispute the errors and allow enough time for the correction to be reflected in your score.
If you don’t find mistakes in your reports you quickly boost your credit score by paying down the balances on your credit cards. Low balances, making your payments on time, and avoiding new accounts before applying for a home loan will have a significant impact one the refinance mortgage rates lenders offer you.
How to Refinance Without Lender Junk Fees
Every home loan has closing costs. Even no cost refinance have fees…they’re just being paid by someone else in exchange for higher mortgage rates. Because interest rates are at historically low levels lenders are trying to make up for lost revenue by charging higher, often “creative” fees. Mortgage brokers are guilty of this too. One of the most common mortgage mistakes is focusing on getting the lowest refinance rates without paying attention to closing costs. This is a mistake because you’ll have to recoup your out-of-pocket expenses before benefiting from the lower payment amount. Junk fees lengthen the amount of time it takes, often making it impossible to break even.
Some examples of junk fees you’ll want to avoid when finding the most effective strategy for how to refinance include rate lock fees, application fees, loan processing, and courier fees. These “creative” fees do nothing but boost lender and broker profits at your expense. Did you know that all the fees you find on your Good Faith Estimate and HUD-1 Settlement Statement at closing are negotiable? One last tip on how to refinance for today is invest a little time haggling over lender fees and you can save yourself hundreds of dollars closing. Don’t be afraid to be that annoying customer…you’ll save yourself thousands of dollars on your home loan in the long run.
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You can get more tips on how to refinance without overpaying one red cent at closing by checking out my free Underground Mortgage Videos.
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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.
