How to Avoid the 7 Deadliest Mistakes Refinance Shoppers Make

by Claude Laloi

"It's important that your mortgage refinancing is done for the right reasons, with your eyes wide open"Everyday many people turn to a mortgage lender to help them refinance a home loan, however because many of them don't know all of the significant issues, they often make incorrect choices. By taking a few minutes to read through the "How to Avoid the 7 Deadliest Mistakes Refinance Shoppers Make" you can reduce or eliminate the chances of making a critical error and save thousands on your home mortgage.1. Make Sure of Your New Interest RateMake sure that you save enough on your mortgage refinancing to justify the process. It is best to seek low interest rate home loans, in order to decrease your existing interest rate by at least .75 to 1. For example, this will save you about $100.00 a month on a $150,000.00 mortgage.2. Know Your Closing Costs Up FrontBase on regulations, closing costs must be disclosed within 3 days of the loan application, however, there are different approaches to calculating them. Closing costs are initially estimated until the details of your specific home loan are obvious. For example: Gmac Home Loans and Countrywide Home Loans may provide closing costs estimates. It is better to use a worst case scenario at the beginning then allowing yourself to receive an unpleasant surprise at the closing table.3. Be Sure You Fully Understand Why You Decided To Refinance Your HouseMany individuals refinance in order to get the best refinance home mortgage loan rate they can possibly get. You should be aware that simply getting a low interest rate home loan is not always to your advantage, so make sure that the gains from your rate reduction more than cover the related fees. There are, however, other legitimate reasons to refinance that may not be related to interest rates. Some are debt consolidation, home improvements, real estate investment purchase or a major expense. Some of these choices may offer other financial or personal advantages, such as taking cash out to buy a car or to buy investment property, which is the best way to go. This way you can build passive income. In this example, you may be able to claim your interest payments, property taxes, and any upfront cost for the mortgage refinancing on your tax return. Always consult an accountant or tax attorney before making these types of decisions.4. Beware of “APR” Advertising“‘APR’ stands for Annual Percentage Rate.” Some mortgage brokers use “APR” gimmicks, teaser rates to get your attention; nevertheless, the home loan may actually end up costing you more. This is why it’s important to ask about it firsthand. Such interest rates are often derived by using a 30 year mortgage (a mortgage calculator is used for this) coupled with an accelerated payment plan. Most lenders allow you to select such a plan, if you chose. Know your actual interest rate that you will be paying when comparing mortgages. It is an excellent idea to compare interest rates from different brokers or lenders in order to find the best rate. You have 30 days to do this and the credit bureau will count it has one inquiry on your credit report. These are just four of the “7 Deadliest Mistakes Refinance Shoppers Make.” A mortgage refinance shopper should consider all options before refinacing. Mortgage brokers have the potential to make more money in refinancing a home mortgage then putting together a mortgage the first time. So, it is to your advantage to inform yourself before loosing thousand of dollars refinancing your home.

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