Top Mortgage Refinance Mistakes to Avoid
Mortgage refinance is a serious financial strategy that should be carefully thought about. Learn about the common mistake that borrowers make when refinancing their mortgage and learn to avoid them.
Not planning head of time.
Mortgage refinance is a strategy, and must not be taken lightly. Why do you want to refinance your home? It is important to list all your reasons before you take the plunge. If you want to lower your payment, then think about ways on how you can lower it. Maybe you can call your mortgage company and negotiate a deal. Or, you can simply refinance your loan and look for lower payment terms. But, don’t be tempted to refinance your home for another 30 years if your main goal is just to lower your monthly payment. Think of the overall interest charges. The longer you pay off your house, the higher the interest that you have to pay. If you have already paid a very high interest on your loan, would you like to repeat the process all over again and extend it for the next decade or so?
Remember that the longer you pay the loan, the more money is going to pay off your principal balance. If you don’t extend your loan term, you have better chances of paying off the principal, and reducing your interests over the life time of your mortgage. The key is in finding ways to balance between the cost of borrowing and lowering your monthly payment.
Not doing the math.
There are many websites offering mortgage refinance calculator. You can also compute it on your own using basic math to come up with the best loan terms possible. The moment you decide to refinance your home, it is time for you to make a full sue of your calculator to shop for the best mortgage rates. There’s nothing wrong in making no credit enquiries while holding a calculator. Work the numbers to know the fees you’ll have to pay, the best possible new interest rate and the loan amount you are qualified to get.
You can use the mortgage calculator to compute your monthly and lifetime savings, new payment, and how long you will break even, considering the costs of your mortgage refinance. Working with a refinance calculator will give you a good idea of what to expect. Even better, when you have a few estimates from mortgage lenders you can use the calculator to help determine who offers the best deal.
If you want to shop for the best refinance rates, don’t be afraid to do a little legwork, you can do some phone calls; fill up enquiry forms and request for quotation. You can also search the internet and compare and contrast mortgage refinance rate and loan estimate from different lenders. After three days, each potential lender you sent an inquiry to will; give you an estimate about the terms of the loan, closing cost, fees and projected payments. Read through the proposals and compare the loan details from each potential lender. Decide which one gives you the best savings and the most affordable payment conditions.
Here are tips on how to refinance mortgage to get the most savings you can possibly get:
Set your refinancing goals: Unless you determine your goal, you will not get anywhere. If your aim is to shorten — or at least maintain — your current mortgage term while reducing your interest rate, then you have a good reason to get one. Remember that when you refinance mortgage, it should always be for the right reason and not an impulsive thought to access money and spend it senselessly.
Get your credit file: You won’t have a lot of options with a poor credit score. That is why it is very important to start your refinancing mortgage hunt with the full knowledge of your credit history and your credit score. Those with higher scores can obtain better mortgage refinance interest rates than borrowers with poor credit score.
Know the current value of your home: Don’t be fooled by mortgage companies offering very low refinancing loan amount to home owners who can get better rates because of their home’s value. There are home value sources online, and you can also check your neighborhood for recent sales of home with the same value as yours.
Always compare mortgage rates: Don’t settle for the first offer made by a mortgage company. You can shop rates online, submit loan applications, and make online enquiries. But, don’t throw out your credit reports sporadically. It may show on your credit file. That’s why it is advisable to go to lenders like NSW Mortgage Corp that conduct no credit check inquiry to avoid your credit score from dipping a bit.
Learn more about mortgage refinance and get the most affordable rates at NSW Mortgage Corp today!