7 Mortgage Mistakes That Make You Feel Dumb

If you’re considering taking advantage of today’s lowest refinance rates the mortgage process can be expensive and intimidating. There’s a lot to take in and mistakes can cost you thousands of dollars. Many homeowners take the easy way out by focusing on just one aspect of mortgage refinancing like getting the lowest refinance rates. With that in mind, here’s a list of seven common mortgage mistakes to avoid when refinancing your home.

  1. Neglecting To Do Your Homework
  2. For most of us our homes are the single largest purchase we make…ever. Despite this many people barrel through refinancing like they’re buying a kitchen appliance. This approach almost always results in overpaying at every turn.

    Investing the time necessary to learn about home loans and mortgage refinancing will help you avoid common mortgage mistakes like paying discount points or comparison shopping with the Annual Percentage Rate.

    Understanding how your credit affects your mortgage rates, your home loan’s amortization, mortgage insurance and the Truth-in-Lending disclosures will save you a lot of money as a homeowner.

    Using a basic mortgage calculator when budgeting for your mortgage payment also helps choose a term length that saves you money without stretching your budget. Not sure where to start doing your homework? My Underground Mortgage Videos have the information you need to avoid paying lender junk fees in one place for just an hour of your time.

  3. Not Checking Your Credit First
  4. The refinance rate quotes you get when shopping for your next home loan are based on your credit. If the refinance rates you’re being offered are higher than what lenders are advertising the likely culprit is your credit score.

    Before you do anything else when refinancing the first thing you need to do is check your credit reports for errors. Nothing will sink your credit score faster than having negative information incorrectly reported on your credit reports. Visit AnnualCreditReport.com to get free copies of your credit reports once per year.

    Most banks and credit unions offer low cost credit monitoring services that allow you to monitor changes in your credit score. Once you’ve reviewed your credit reports and are satisfied that they’re accurate the quickest way to improve your credit score is to pay down the balances on all of your credit cards below 30% of the credit limit.

    Be sure and allow enough time for the new balances or corrections to affect your credit score before you begin shopping for the lowest refinance rates; this is where a credit monitoring service can come in handy.

  5. Not Shopping Around From Today’s Best Mortgage Lenders
  6. You’d be surprised how many of your neighbors don’t put out the effort to shop around for their mortgage. Most simply pick the lender advertising the lowest APR in your area. Others simply rely on their bank as a matter of convenience. Either way the majority of your neighbors paid too much for their home loans.

    Truth be told mortgage offers and fees vary significantly from one mortgage lender to the next. Most lenders have their marketing department structure their home loan offers and manipulate the Annual Percentage Rate with discount points to make them seem more attractive. This is why choosing the mortgage quote with the lowest APR often gets you the highest out-of-pocket expenses.

    Don’t assume that major banks like Bank of America or Wells Fargo will have the best deals. Often you’ll find the lowest fees come from local community based credit unions, many of which have membership open to the public.

    Bonus Tip: Never choose a mortgage based on the Annual Percentage Rate. Base your decision on the fees found in section 800 of your HUD-1 Settlement Statement AND zero point refinance rates.

  7. Choosing a Mortgage Solely Based On Refinance Rates
  8. This is probably the single most common mortgage mistake and it’s easy to understand why. The refinance rates you get along with term length affect what your payment will be month in and out. You might think the fees you’re paying are a small price to pay for getting the lowest payment; however, they can quickly turn that low refinance rate into an expensive mistake.

    This is why the break-even point is so important with mortgage refinancing. Basically if you’re not able to recoup the fees you’re paying for loan origination and any unnecessary discount points you’re going to be losing money no matter how low your interest rate.

    You can approximate your break-even point by adding up all of the fees you’re paying at closing and dividing by how much your mortgage payment will go down each month. Suppose you’re saving $80 a month by refinancing and it’s going to cost you $4,000 to close. Your break-even point is 50 months, ($80/$4000 = 50) which is just over 4 years.

    If you sell or refinance again before breaking even you’re going to be losing money no matter how attractive the interest rate. It’s worth noting that this calculation is only valid if you keep the same term length when refinancing. That is, choosing a 30-year fixed rate mortgage to replace your existing 30-year mortgage. If you choose a home loan with a longer term-length it’s going to be impossible to break even because of the higher finance charges over the lifetime of your home loan.

  9. Not Considering ALL Closing Costs
  10. There are more fees to consider than your loan origination fee as well as tax considerations. Remember while getting today’s lowest refinance rates might do wonders for your monthly payment your mortgage interest tax deduction is going to be much smaller come April.

    Other considerations include mortgage insurance, which can drive your payment up by hundreds of dollars, property taxes, and your homeowners insurance.

    This is why using a mortgage calculator when refinancing can help you plan your budget, which needs to include all of these secondary expenses.

  11. Not Paying Attention To Your Closing Documents
  12. Closing on a new mortgage is all about paperwork. There’s a contract to sign and a whole lot of disclosure documents. The truth-in-lending disclosure statement, Good Faith Estimate, and the HUD-1 Settlement Statement can be confusing and often have different amounts for the same fees.

    Remember your Good Faith Estimate is only an estimate and could change fore your sign the final documents. (Pay close attention to and question all section 800 fees.)

    When it comes to fees your HUD-1 Settlement Statement is the final word and should be carefully reviewed to make sure there are no surprises.

    What can you do if you’ve closed and find something on the HUD-1 that’s not correct? You have three business days to change your mind when refinancing before the mortgage loan is funded. You can walk away at any time during three business days (including Saturday) and you’ll probably only be out the application or rate lock fee.

    This period is your mortgage refinancing three-day rescission period so if you catch something after closing your have a parachute if you want to walk away from the loan. Loan officers don’t like to talk about the rescission period but if you’d like to execute your rights you’ll need to notify both the lender and your broker in writing (by fax).

  13. Giving Into a Pressure Sales Pitch
  14. Don’t let a pushy loan officer or mortgage broker pressure you into a bad home loan. Remember these people are salespeople and their commission often depends on how much you’re paying (or overpaying).

    Despite new regulations intended to protect homeowners many lenders and mortgage brokers engage in deceptive practices intended to push you into an overpriced home loan.

    Pressure sales tactics include steering you to a mortgage with junk fees including unnecessary discount points. Rate lock fees, administrative fees, application fees and processing fees are all garbage and can be negotiated away as a condition of getting your business.

    Even if you don’t have the cash to pay for closing and are accepting higher refinance rates in exchange for having the lender pay your closing costs you still need to pay attention to the fees you’re being charged. Anything you’re paying out-of-pocket or trading for a higher interest rate reduces the benefit you’re getting from mortgage refinancing.

    Finally, make sure you’re getting everything in writing, including your rate lock. If you don’t have your mortgage terms and lock in writing it never happened. Don’t expect a lender to honor any terms that you don’t have in writing up front.

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You can learn more about getting the best deal on your next home loan by avoiding unnecessary fees and markup by checking out my free Underground Mortgage Videos.

httpv://www.youtube.com/watch?v=be9md0A0_2c
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Here’s a quick sample to get you started refinancing with today’s best refinance rates without paying junk fees…

7 Tips to Get the Lowest Refinance Mortgage Rates

If you’re shopping for the lowest refinance mortgage rates you might be disappointed to find the quotes you’re getting from companies like Amerisave are much higher than what lenders are advertising. Mortgage lenders use a bait-n-switch trick when advertising refinance mortgage rates; advertised rates are frequently based on a credit score of 780 or better. If your credit score is less than perfect your refinance mortgage rates will come in much higher; however, there are steps you can take to improve your quotes and save a lot of money in the process. Here are several tips to help you get better refinance mortgage rates for your next home loan without paying unnecessary fees or discount points.

Beware Deceptive Lender Tricks

Mortgage lenders manipulate their advertised refinance mortgage rates by using lofty credit scores or hiding discount points in the fine print.

If your credit score is lower they’ll still give you those low refinance mortgage rates, you’re just going to have to pay through the nose to qualify.

Lenders will give you lower rates if you pay discount points up front…one point is one percent of your home loan amount paid at closing and typically lowers your refinance mortgage rates by .25 percent per point.

While it’s true that mortgage interest rates are near historically low levels you shouldn’t have to pay a fee to get them. Because interest rates are at such low levels lenders are doing everything they can to boost profit at your expense with junk fees and unnecessary discount points. Mortgage brokers are also guilty of fleecing your neighbors by overcharging their origination fee. The good news is that you don’t have to be a personal finance guru to avoid overpaying and benefit from today’s lowest refinance mortgage rates. You just have to find the right person to arrange your next home loan.

How to Get Better Refinance Mortgage Rates

Before you start shopping for a new home loan, start by checking your credit reports for mistakes and outdated information. Mistakes are very common and drag your credit score down like a boat anchor; you can check all three reports for free every year by visiting the website AnnualCreditReport.com.

If you find mistakes you’ll need to dispute the incorrect information and allow enough time for the correction to be reflected in your FICO Score.

Other steps you can take to make sure your credit score is as high as possible include paying down the balances on your credit cards and avoid applying for new accounts for at least 90 days before shopping for refinance mortgage rates. It goes without saying; however, make sure you’re paying all of your bills on time as it seems to take late payments forever to drop off your history. Once you’ve cleaned up your credit reports it’s a good idea to keep an eye on them throughout the year. If you’re a member of a credit union you may be able to take advantage of low-cost credit monitoring services that will do this for you.

Click Here For More Details…

You can learn more about getting today’s best refinance mortgage rates without paying unnecessary discount points or lender junk fees by checking out my free Underground Mortgage Videos.

httpv://www.youtube.com/watch?v=be9md0A0_2c
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Here’s a quick sample to get you up to speed on deceptive mortgage lender tricks that cost your neighbors thousands of dollars…

Closing Costs for Refinancing a Mortgage

The most common homeowner mistake is overpaying closing costs for refinancing a mortgage. Did you know that lender and broker fees are negotiable and vary widely from one company to the next? Spend a little time comparison shopping and haggling with prospective brokers over fees and you can literally save yourself thousands of dollars when mortgage refinancing. Here are several tips for you refi to help you pay less closing costs for refinancing a mortgage loan.

Reasonable Closing Costs for Refinancing a Mortgage

How much can you reasonably expect to pay closing on your mortgage refi? What fees are necessary and which ones are simply garbage? The difference can make or break your mortgage refinance because you’ll have to recoup these out-of-pocket expenses before benefiting from your new home loan. The more you pay, including lender junk fees, the longer it’s going to break even on your closing costs.

How much should you pay? One area most of your neighbors overpay for their mortgage refinance is the loan origination fee. This is paid to the mortgage broker or company for arranging your new home loan. One percent for loan origination is perfectly reasonable; however, many brokers try to charge double, if not more for their services. Despite what they tell you there’s nothing magical about the work your mortgage broker does; if the person you’re working with isn’t willing to negotiate their fee simply move on to the next broker.

Beware Mortgage Lender Junk Fees

A dishonest mortgage broker/lender will try to boost their profits at your expense by including unnecessary fees in your closing costs for refinancing a mortgage. These junk fees include the application fee, processing fee, broker courier fee, and any refinance rate lock fee. If the broker you’re working with quotes you a fee for locking your interest rate this is a sure sign that you’re working with a dishonest person as no lender in the United States charges a fee for locking in their lowest refinance rates.

Good Faith Estimate vs. HUD-1 Settlement Statement

Should you trust the Good Faith Estimate (GFE) provided by your lender and what about that Annual Percentage Rate? When it comes to shopping for the best refinance rates the Good Faith Estimate and Annual Percentage Rate (APR) are less than worthless for comparing home loan offers. The problem with APR is that there is no standard for lenders to follow when calculating as to which fees they’re required to include in the calculation. The APR is based on an estimate given in “good faith” (get it, Good Faith Estimate) that has become little more than a marketing tool for lenders to sell overpriced home loans. When it comes to fees the last word is on your HUD-1 Settlement Statement, not on the GFE.

The Ultimate Guide to Paying Less For Your Next Home Loan

There is a method for shopping for the best mortgage quotes when refinancing that gets you today’s lowest refinance rates while avoiding junk fees and lender markup. Focus your energy on finding the right person to arrange your refi instead of comparing those Good Faith Estimates into the wee hours of the morning and you can save yourself thousands of dollars and hours of frustration.

Click Here to Get Started

You can learn more about paying less for mortgage refinancing while avoiding unnecessary fees and other common mortgage mistakes by checking out my free Underground Mortgage Videos.

httpv://www.youtube.com/watch?v=be9md0A0_2c
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Here’s a quick sample to get you started saving thousands on closing costs for refinancing a mortgage.

Mortgage Refinance Rates for Dummies

If you’re thinking of taking advantage of today’s best refinance rates to lower your monthly payments there are several things you can do to make sure you’re not overpaying for your next home loan. Most of your neighbors approach mortgage refinance rates shopping by collecting good faith estimates from half a dozen lenders and choose the one with the most attractive offers; however, this approach is why nearly all your neighbors are overpaying. Here are several tips before you refi to help you get the lowest mortgage refinance rates without overpaying.

Mortgage Refinance Rates 101

If you’ve spent any time shopping for mortgage refinance rates you might be frustrated to find that the quotes you get are higher than the mortgage refinance rates you’re seeing advertised. Keep in mind that advertised mortgage refinance rates are not based in reality and your results will vary depending on your credit score and loan-to-value ratio.

Here’s a chart to illustrate how your credit score affects mortgage refinance rates and how much you’ll pay in finance charges over the lifetime of your home loan:

credit mortgage rate Mortgage Refinance Rates for Dummies

The higher your credit score when shopping for mortgage refinance rates the closer you’ll get to what lenders are advertising. Checking your credit reports for mistakes and avoiding opening new accounts can literally save you thousands as dollars as illustrated above.

What About Discount Points & Lender Fees

Should you pay discount points to lower your interest rate and what about lender junk fees? If you’re having difficulty qualifying for mortgage refinancing, paying discount points could get you in the ballpark of what you’re seeing advertised; however, whether you can justify the cost depends on how long it’s going to take you to recoup the fees you pay from your lower payment amount. The more you pay in lender fees, closing costs, and discount points, the longer it’s going to take to break even and realize a benefit from your new home loan.

You can easily determine if it’s worth it by figuring out what your new mortgage payment will be and how much lower it is from your old payment. This is what you’re saving each month based on the lower mortgage refinance rates. Once you know how much your mortgage refi will cost you, divide this amount by how much you’re saving each month and you’ll know the number of months it’s going to break even on your out-of-pocket expenses. If you’re ok with how long it’s going to take you to break even then you should be able to justify the expense.

Avoiding Unnecessary Mortgage Refinance Fees

You can cut the amount of time it takes to break even on your mortgage refi by avoiding lender and broker junk fees. Mortgage rate lock fees, loan processing fees, and broker courier fees are all junk fees you’ll want to avoid paying. One of the most common mortgage mistakes is overpaying the loan origination fee. Keep in mind while rate shopping that a reasonable amount to pay for your loan origination fee is one percent of your mortgage amount.

Get Instant Access

You can learn more about paying less for your mortgage refinance by avoiding unnecessary fees and markup by checking out my free Underground Mortgage Refinancing Videos.

httpv://www.youtube.com/watch?v=be9md0A0_2c
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Here’s a quick sample to get you started finding today’s best mortgage refinance rates without overpaying.

Should I Refinance My Mortgage?

If you’re asking the question Should I Refinance My Mortgage, there are several things you need to know to make an informed decision and avoid common mortgage mistakes. The internet is a great resource when it comes to researching the best refinance rates; however, there is a lot of bad advice when it comes to answering the question “Should I Refinance My Mortgage.” Here are several tips before you refi to help you answer that nagging question.

Should I Refinance My Mortgage Now?

Conventional wisdom from the days of overpriced financial advisors states that you should never refinance your home loan unless your new interest rate is exactly two percent lower than the best refinance rates you’re qualifying. This is ludicrous on several different levels. First of all there are several perfectly good reasons for mortgage refinancing that don’t always result in a lower amount.

Secondly, the two percent rule doesn’t take into consideration how much it’s going to cost you to get the home loan (lender and loan origination fees) or how long you plan on staying in your home. There is a better way to answer the question Should I Refinance My Mortgage that takes all of this into consideration.

A Better Way to Refinance Your Home Loan

Bad mortgage refinancing advice aside, the best way to answer the question “Should I Refinance My Mortgage” is on a cost/savings basis. Assuming that your goal for mortgage refinancing is to get today’s lowest refinance rates to lower your monthly payments this isn’t hard to do. Once you’ve completed mortgage rate shopping and have collected several different quotes start by adding up all the closing costs including the loan origination fee. Divide your total costs by the amount you’ll be saving each month and you’ll know the number of months it’s going to take to recoup your closing costs and break even.

The reason recouping your expenses is so important is that you have to break even before realizing any benefit from your mortgage refi. The more you pay at closing, including lender junk fees, the longer it’s going to take to reach the point where you’re benefiting. Avoid paying lender junk fees at closing on your refi and you’ll benefit much sooner.

About Mortgage Rate Shopping

Unless you’ve been living on under a rock you’ve heard that the financial meltdown and debt fiasco in the United States has resulted in historically low refinance rates, below four percent in some cases. You might be discouraged to find that the refinance rate quotes you get are much higher than the mortgage rates you’re hearing about on the news. What gives? Why can’t you take advantage of the same interest rates your neighbors are bragging about?

Your Credit Score Is Key

You want today’s best refinance rates and to get them you need to focus on your credit score even before answering the question “Should I Refinance My Mortgage.” The reason your credit score is so important is that lenders use this number to asses your risk as a borrower. This chart shows the effect this number has on your refinance rates and the total cost of borrowing for your home loan.

credit mortgage rate Should I Refinance My Mortgage?

There are steps you can take to improve your credit score to make sure it’s not keeping you from today’s best refinance rates. Checking your credit reports for errors while avoiding opening new accounts will go a long way to make sure your credit score is where it needs to be before mortgage refinancing.

Get Instant Access

You can learn more about getting the lowest refinance rates while avoiding unnecessary fees once you’ve answered the question “Should I Refinance My Mortgage” by checking out my free Underground Mortgage Videos.

httpv://www.youtube.com/watch?v=be9md0A0_2c
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Here’s a quick sample to get you started answering that all important question for yourself while avoiding common mortgage mistakes.