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- What Are Netting Escrows & How Does It Work?: The Best Guide - January 2, 2024
- The Secret About Prescriptive Easement: Top Guide 1 Must Know - December 4, 2023
- About Home Equity Loans In Texas And How Can One Obtain It - November 27, 2023
List of Refinancing Mistakes
If you are thinking about refinancing there are a few things that you want to try and avoid.
If you are thinking about refinancing right now, it is the best time to do so. The interest rates are at their all-time record low. Due to this, the number of refinancing applications is increasing every day.
In this post, we will learn 5 refinancing mistakes that you should avoid when you are refinancing your mortgage.
1 - Don’t forget to shop around
The first and most common mistake that you need to avoid is to go with the offer you get from the first lender. You need to shop around and make sure that you speak to at least 3 lenders or brokers before you finalize your loan.
Get more than one mortgage quote from the market which would help you to compare more wisely and make an informed decision.
You can also double-check with some online resources for you to know what the market trends are like.
Make sure that when you are shopping around for a mortgage you don’t want to deal with too many lenders or brokers as it might get confusing and could also affect your credit scores.
2 - Ignoring Extra Cost
The second common refinancing mistake is to ignore extra costs. It is not just about how much you save a month or what your interest rate is.
There are also closing costs and points that could be involved and all of these things add up.
You may look at the current low-interest rate and think that is straight savings, however, with the closing costs and points involved you may not even break even.
So make sure that you look at the additional costs irrespective of your savings and interest rate.
3 - Calculate Your Break-Even Point
The third mistake goes with the second one, make sure you calculate what your break-even point is. Don’t ever refinance without calculating your break-even point.
For example, if you are planning of moving in the next twelve months and you get a refinance offer where you are saving $300 on your mortgage payments, well, it may take you 18 months before you are actually break-even.
So in that scenario, it would no be a smart decision to refinance.
4 - Opening new credit
Another refinancing mistake that you need to avoid is, open new credit lines or credit cards or borrow money while you are shopping for refinancing. Each time you open these new lines of credit, they negatively impact your credit score.
The last thing you want to do is drop your credit score because your credit score is one of the most significant parameters that will determine what interest rate you can get in the market.
If you are thinking about refinancing in the next twelve months start preparing your credit, and the best way to do that is to avoid borrowing too much.
5 - Waiting too long
The last mistake to avoid when refinancing is waiting too long to trigger. You need to remember that the mortgage rates change every single day. Sometimes multiple times in a day. A 2.857 today could be a 3.125 tomorrow.
And over the course of 30 years on a three hundred thousand dollars mortgage, that shift could cost you tens of thousands of dollars.
When you get on the phone and have selected the lender that you want to go with, ask them what is the lowest rates have seen in the last couple of months.
If you are within striking distance you may want to pull the trigger and get it done.
Conclusion
If you make sure to follow the steps and avoid these five mistakes you can end up saving a lot of money in the long run after you refinance. We at Compare Closing LLC believe that every borrower is special.
Everyone has different needs and situations and depending on that we select one from our set of preferred lenders who can provide you with the deal to match your needs and situation.
Get in touch with our experts to get a quote from one of our preferred lenders today.
Wow! This blog looks just like my old one! It’s on a entirely different subject but it has pretty much the same page layout and design. Outstanding choice of colors!