Guest blog by Kevin Craig
Nowadays, for maximum people, home is the biggest investment of their lives and mortgage refinancing is quite a common option. However, many find this mortgage refinance process a little confusing and often tend to commit some common mistakes during the procedure. If you are one of them and presently considering a mortgage refinance to lower your current interest rate, you must prepare yourself beforehand. With a little bit of homework and some advice from family and friends, who have already gone through the process before, you can avoid these common refinance mistakes and can make this entire refinancing process much easier. Read ahead, to know about some of the most common mistakes, which you must avoid, while refinancing your mortgage.
Shop around before refinancing your mortgage
Homeowners often believe it is more easy and convenient to get a refinance from their current lender, but what they overlook is their current lender may not always offer the best option in terms of rates, fees, and other terms and conditions applied. Therefore, it’s best to shop around and make a thorough market research, before finalizing the deal. Make sure you locate the best offer available.
Make a break even point analysis beforehand
If you are refinancing to save money, you must conduct a thorough break even point analysis in advance. Figure out what the total cost of the refinance is and how much you will exactly save every month by refinancing your mortgage. Make sure you pay closing costs that can be counterbalance by your savings due to the lower interest rate. To calculate the break-even period, which means the number of months you will have to stay in the property to break-even on your refinancing costs, divide the total cost by the monthly savings.
Note- All reliable lenders offer you a Good Faith Estimate of closing costs within 3 business days of receiving your loan application. It can help you to stay aware of all the hidden costs. Make sure you receive those estimates right on time.
Tax assessor’s value is not the market value of your house
Another common mistake that people commit is they assume the county tax assessor’s value as the market value of their house. The lenders do not determine the loan amount based on the assessed value of your property. Rather they depend upon the appraised value of your property determined by a real estate agent using either the sales comparison approach or the cost approach.
Scan through the loan doc properly before signing the dotted line.
Make sure you browse through the loan docs, before signing on them. Check all the terms and conditions thoroughly and if possible, do it beforehand, because you may not get enough time to go through all the docs at closing.
If you are not cautious enough, refinancing mistakes can cost you, both time and money and can lead you to foreclosure. Therefore, keep the aforementioned points in mind and avoid all the impending dangers, which you can easily avoid by being a little proactive.
Michelle Castle provides mortgage loans to all of North Texas and Southern Oklahoma. Call Michelle Castle at (903) 892-1998 if you are looking for a home loan in North Texas and Southern Oklahoma.