Mortgage refinancing has the potential to save you money if you avoid overpaying for your new loan. Mortgage companies and brokers are in the business to make money at your expense; they have clever ways of disguising fees and markup to boost their revenues. Here are several tips to help you avoid paying unnecessary fees and interest rate markup when mortgage refinancing.
Mortgage Refinancing Mistake #1: Not Checking Your Credit First
You get free credit reports once per year from all three credit agencies; take advantage of this and check your credit records for errors before shopping for a new home mortgage refinance loan. Having mistakes or negative information such as bad debt or judgments in your credit report will kill your credit score. Your credit score largely determines the interest rate you will qualify and you need your score to be as high as possible. Dispute any errors found in your credit reports and settle with your creditors to remove any negative information. The money you’ll save by qualifying for a lower interest rate makes this well worth your time.
Mortgage Refinancing Mistake #2: Not Shopping Around
Many homeowners make the mistake of accepting the first favorable offer they are approved for. If you neglect to shop around or focus only on mortgage rates you risk overpaying thousands of dollars in lender fees, closing costs, and retail markup. Always negotiate with mortgage companies for lower fees and insist on a mortgage rate with zero markup. This markup is called Yield Spread Premium and paying it results in paying thousands of dollars in unnecessary mortgage interest in the early years of your mortgage alone.
Mortgage Refinancing Mistake #3: Choosing the Wrong Loan
There are different types of mortgage loans for every financial situation; however, choosing the wrong type could result in overpaying thousands of dollars, even losing your home. Mortgages come with different interest rates types, repayment structures, and term lengths depending on your needs. The degree of risk is directly proportional to the type of mortgage you choose. This is why doing your homework and researching mortgage offers will help you avoid a financial disaster.
You can learn more about choosing the right mortgage and avoiding costly homeowner mistakes by registering for a free, six part mortgage video tutorial.
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Louie Latour specializes in showing homeowners how to avoid costly mortgage mistakes and predatory lenders. For a free copy of “Mortgage Refinancing - What You Need to Know, " which teaches strategies to find the best mortgage and save thousands of dollars in the process, visit .
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