With interest rates still on the lower side, it is still the right time to refinance your mortgage. While at it, you want to ensure you avoid simple mistakes that might deter you from the savings you plan to attain. Here are some of the common refinancing mistakes you should evade.
1. Not doing enough research
Before you contact the mortgage lenders, you should first do your homework. First, find out what your credit score is, as it will be a major determinant in the success of your refinance. You also need to understand how much your home is worth, either by talking to a realtor or by looking up home-valuation websites. Armed with this information, now you can request for quotations from several lenders.
2. Refinancing with the present lender without shopping for better rates
Refinancing with your current lender may be convenient, but there is no assurance of it being cheap. Do not assume that the lender will offer you an amazing discount and fail to shop around. Besides the interest rates, one ought to consider the fees that they charge in processing the loan. Ensure that you compare similar deals.
3. Having a low credit score
Remember that your credit score will determine the kind of refinance deal you get. When you refinance your home loan with low credit, it means that you will not experience adequate savings. A typical loan requires a credit score of about 660 if you want a fair deal.
4. Failing to consider all costs
Lowering your monthly installments is a goal that many people wish to achieve when refinancing. Before you even start the refinancing process, confirm from your mortgage documents that there is no penalty for early payment. Consider the period you have left to clear the mortgage as well as the refinance closing expenses. Be on the lookout for lenders who factor in closing costs in the monthly payments.
