26 Sep Avoid the Pitfalls of Refinancing
Mortgage rates remain at a historic low. If you haven’t refinanced in a while, now just may be the time! Before you jump into the pool with both feet, make sure you consider the following:
- Know your options. Comparing quotes from at least three different lenders can save you hundreds, if not thousands of dollars. You should also check with your urrent servicer; they may not require as much documentation and could keep your records simpler come tax time.
- Know the TRUE cost. Not all loan companies and programs are alike. They may advertise an “amazing” rate, but know the fine print (the APR is the most telling). Savings can quickly be eaten up by fees for appraisals, closing, and other “junk.” Don’t forget any pre-payment penalties on your existing mortgage(s).
- Know your goals. Short-term and long-term. If you plan to sell the house in three to five years, or turn it into a rental property, knowing that ahead of time can help you decide the benefits and drawbacks of one program or company versus others.
- Know your credit. Credit scores are more important than ever before. A lender can check your credit right before closing. Don’t do anything to jeopardize the results: keep your bills current, don’t shift money, and don’t take out any new lines of credit. Any sudden negative change in your credit could affect your rate right at closing – or ead the lender to pull the loan completely.
Saving money on your mortgage payment every month is always a plus – just make sure you know everything about refinancing before it costs you more than you bargained for!