Whenever there’s a drop in the interest rates, there is a sharp rise in the demand for mortgage refinance. However, it’s important for you to keep in mind that it actually isn’t a great idea to consider refinance options. Jumping the bandwagon without researching proper refinance options would be tantamount to a financial suicide almost.
It’s also mandatory that you actually do your homework well by conducting a thorough research of the refinance options available in the market at a given point of time. Though it’s important to act quickly enough when mortgage rates are low, yet it’s advisable that you take care to not make the common mistakes when rushing into refinance.
Read on to know the mistakes that you should actually avoid when going in for refinance.
The 5 common mistakes you should avoid
Keep the following guideline in mind when you go on to refinance your mortgage:
Don’t overestimate the value of your home – Please don’t be under the illusion that the value of your house will remain the same as it was 5 years ago. Home prices are falling all over the nation and they’re expected to fall even more. So, in case you haven’t got enough equity, then there are chances that you’ll receive a refinance offer that’s higher than what you’ve expected.
Don’t focus only on the interest rates – Interest rates are undoubtedly important when it comes to refinancing. However, don’t make the mistake of focusing solely on the interest rate itself. The fees, loan terms and points are also equally important and you’ve got to look at the bigger picture if you wish to avoid a major refinancing mistake.
Don’t hesitate to lock in low rates – If you’re hesitating to lock in your interest rate as you’re waiting for it to fall further, then it’s advisable that you don’t wait and lock in now. Remember that in case the rates don’t fall further or increase by any chance, then at least you’d have locked in a great interest rate already.
Gather knowledge about refinancing documents – Don’t be ignorant. Read the legal documents thoroughly before you actually go on to sign them. It’s a fact that there might be 80 pages or more of documents involved when you go for a mortgage or a refinance. Hence if you don’t read all of them properly, you’ll never know exactly what your loan terms are.
Always compare mortgage lenders – It’s not always the best option to refinance with your current mortgage lender. It might be convenient of course, but then your current mortgage lender might not be offering you the lowest mortgage rates that you would’ve otherwise qualified for had you approached some other mortgage lender.
Refinance is something that’s been essentially designed to save you some precious dollars. However, it’s extremely important that you take your time and explore all available options possible to get the best deal for yourself. The above guidelines would surely help you to avoid the 5 common mistakes that are made often when going in for refinance.