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How to avoid costly refinance mistakes
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So why do you want to refinance your mortgage? Are you trying to save money with a lower monthly payment? Are you trying to lower your interest rate? Do you want to refinance with a cash-out equity loan?If you’re simply trying to find a lower interest rate, make sure you examine the related fees and closing costs. If you can save enough money to cover these costs, refinancing may be right for you. At we will provide you with a Good Faith Estimate so you can analyze these costs.
Be sure you identify which charges are third party charges such as title insurance, escrows, and recording fees. These fees will be the same regardless of what lender you choose.
The biggest and mostly costly mistake to be avoided when refinancing is letting rates, closing costs and minutia distract you from what should be yoour one main goal: to refinance into the loan program which best fits your personal financial situation.
If you are quoted a loan with settlement charges that you feel to be extremely high, make sure you contact another mortgage professional to get another quote to compare the first one to. Too many people do not shop around enough or even at all to make sure they are getting a fair deal. When comparing the quotes make sure you look over the entire quote as a whole and not just at the settlement charges. Compare the rates, compare the closing costs, compare the loan programs that they have worked up for you, etc... Company A may have higher settlement charges but a rate that is better by a full percent and Company B's closing costs may be a little lower but his rate is higher and on a worse loan program than Company A. If the quotes are close it is usually best to go with the company that you feel most comfortable with and that you feel is the most upfront.
When comparing loans between several companies, be sure that you are being quoted on the same loan program. Different mortgage loans can have different closing costs associated with them. Also, ask each company for a copy of the Truth-In-Lending (TIL). The TIL will break down the total cost to close your loan, reflected as the APR. The TIL will also show if there are any prepayment penalties with the new loan.
It will be important to understand if your current mortgage carries a "prepayment penalty" fee. If the payoff comes with this fee associated your estimated costs, fees and or cash out will be dramatically affected by this additional cost.
At we will do a complete financial analysis to see if combining some of your credit debt to your refinance will be cost effective. We will compare interest rates on your current debt as well as monthly cash flow advantages.
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