How to Shop for the Lowest Refinance Mortgage Rates

Are you looking for the lowest refinance mortgage rates and want to avoid paying unnecessary fees? Do you know how to spot lender junk fees correctly using your Good Faith Estimate and HUD-1 Settlement Statement? Here are several tips before you refi to help you get the lowest refinance mortgage rates from the best mortgage companies like Amerisave without leaving money on the table at closing.

Refinance Mortgage Rates Online

The Internet is an excellent resource for shopping for the lowest refinance mortgage rates if you go about it correctly. The problem is that many homeowners approach mortgage refinance rate shopping in the same manner they approach shopping for a kitchen appliance. Most of your neighbors collect a few Good Faith Estimates, squint at them until one in the morning and choose the offer with the lowest interest rate. This approach often results in overpaying thousands of dollars in unnecessary discount points and junk charges.

What Fees Are Legitimate & Which Are Junk Fees

Every home loan has fees you’ll be required to pay at closing. Even those no fee refinance offers trade paying closing costs for a higher monthly payment. The closing costs you’ll pay for mortgage refinancing fall into the following four categories:

  1. Mortgage Lender Fees
  2. Government Fees
  3. Escrow and Pre-paid Interest Fees
  4. Third Party and Title Fees

How can you tell which are legitimate and which are junk? Government fees are unavoidable and are required by the State, County, or town you’re living. No one’s happy paying property taxes and other charges; however, the government fees you find on your Good Faith Estimate and HUD-1 are all legitimate and should not vary among the best mortgage lenders.

Escrow fees will vary from one lender to the next as many lenders have different guidelines for prepaying property taxes or insurance. These fees, including interest fees, are usually based on how much you’re borrowing.

The most common mortgage mistakes come from lender fees and third party expenses. Lender fees include any discount points required to lock your refinance mortgage rates and the rate lock fee charged if any. Rate lock fees, application fees, processing fees, and document prep or courier fees are all junk fees and should be questioned and negotiated away.

How to Use Your Good Faith Estimate Correctly

Lenders are required to give you the Good Faith Estimate (GFE) which is supposed to include all closing costs and fees up front, when you submit your application for mortgage refinancing. There is a 72 hour waiting period from the time your lender receives your application before they can start billing you for fees like a home appraisal. New disclosure laws require the Good Faith Estimate to be accurate; however, keep in mind that this document is still just an estimate given in good faith.

The final word on lender fees comes with your HUD-1 Settlement Statement that will reflect anything that changed since you received the Good Faith Estimate. You might be able to negotiate a lower loan origination fee for example, or find that your attorney fees have gone up because your application required additional work. If anything does change on your Good Faith Estimate after you receive it, the lender has to provide you an update and your closing will be delayed by three days. You can use the additional time to compare offers from various lenders if you’re finding too many changes to lender fees.

What to Expect Closing on Your Mortgage Refi

You’ll get a copy of the HUD-1 Settlement Statement at closing showing all charges, including what you’ve already paid. Pay close attention to the mortgage loan origination fee which is the commission paid to the broker arranging your refi. The HUD-1 is the final word when it comes to fees and should not differ from any updates you received on the Good Faith Estimate. Take your time and carefully review the HUD-1 Settlement Statement to make sure everything matches what you’ve been promised, including your refinance mortgage rates.

Your mortgage lender is required by law to provide you the HUD-1 Settlement Statement 72 hours prior to closing to give you time to review the document. (It used to be 24 hours prior) The change gives you time to scrutinize everything and not be rushed closing on your new home loan.

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You can learn more about getting today’s lowest refinance mortgage rates without overpaying 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 lowering your payment without leaving money on the table at closing…

How to Get Better Refinance Mortgage Rates Than Your Neighbors

If you’re shopping for refinance mortgage rates you might be disappointed to find that the quotes you’re getting are coming in higher than what lenders are advertising. There are two reasons this could be happening: your credit score and deceptive lender marketing. Here are several no BS tips to help you get the best refinance mortgage rates and pay less than your neighbors closing on your next home loan.

Refinance Mortgage Rates Online

Shopping for mortgage refinance rates on the internet is a convenient way of collecting quotes; however, relying on the Good Faith Estimates you find online is a sure way to overpay. Recently lenders have been advertising 30-year fixed refinance mortgage rates less than four percent. Interest rates are at historically low levels but they’re not that low. Lenders routinely quote refinance mortgage rates that include discount points in the fine print. You’re paying through the nose at closing to buy your interest rate that low.

Discount Points Definition

If you’re new to all this mortgage gobbly-gook you might be unfamiliar with the term discount points. A discount point is defined as an amount you pay at closing to buy down your refinance mortgage rates. One discount point is one percent of your home loan amount and typically lowers your refinance mortgage rate by .25 percent. Does it make sense to pay discount points when interest rates are at their lowest levels ever? Absolutely not…it’s just a way for lenders to boost their profits at your expense.

Deceptive Mortgage Advertising

Aside from artificially lowering refinance mortgage rates by charging discount points the problem with the interest rates you see advertised is that they assume you have a credit score of 720 or better and a favorable loan-to-value ratio. If you have less equity in your home than 80 percent or have a credit score below 720 your refinance mortgage rates are going to be quoted higher.

There are steps you can take to ensure your credit isn’t hurting you when shopping for a new home loan. First, check your credit reports at annualcreditreport.com and make sure there are no mistakes dragging down your FICO score. Second, avoid opening new accounts for at least 90 days prior to refinancing and pay down the balances on your credit cards as much as possible. Maxing out your credit cards can lower your credit score by as much as 30 points, resulting in higher mortgage refinance rates.

Beware Lender Junk Fees

One of the most common mortgage mistakes your neighbors make is focusing only on getting the lowest refinance rates at the expense of fees. The reason fees are so important when mortgage refinancing is that you’ll have to recover your out-of-pocket expenses before benefiting from lower refinance mortgage rates. The more you pay at closing, including lender junk fees, the longer it’s going to take to break even. Lender junk fees can make it very difficult, even impossible to recover your out-of-pocket closing costs negating any benefit you’re getting from your new home loan.

Click Here For More Details…

You can learn more about getting today’s lowest refinance mortgage rates without paying unnecessary fees by checking out my free Underground Mortgage Videos.

httpv://www.youtube.com/watch?v=be9md0A0_2c
  • Free Underground Mortgage Videos

Here’s a quick sample to get you started finding today’s lowest refinance mortgage rates without overpaying one red cent.