Too often homeowners hear from someone or read something about refinancing their mortgage and immediately jump to find a new mortgage without learning more. Refinancing can certainly be a good option, but doing it incorrectly can actually cost you money over the short and long term.
When refinancing your home loan, there are four common mistakes that homeowners make on a regular basis. By recognizing why these issues are problematic, you can prevent the same problems during your refinancing process.
Not Shopping for Lenders
While your current lender may be the best offer when refinancing your home loan, it is very likely there is a better option on the market. Take the time to compare lenders and mortgage services in your area and well as online.
Online lenders typically offer lower rates and provide personalized, customized service that may be superior to what you have from your current lender.
If you have recently bought a new vehicle, applied for new credit or make any type of large purchase it may not be the best time to consider refinancing your home loan. Lenders look at the credit score carefully, and all of these types of activities will negatively impact your score.
Not Locking the Rate
A refinancing company should be willing to lock in your quoted rate for 30 or 60 days. This will be important to allow the application to go through processing and approval and know what the rate will be. Failing to lock in rates can result in unpleasant rate increases during processing.
Not Understanding Documentation
Make sure to have a clear picture of the refinancing process and the documents that are required for verification. Failing to provide these documents can result in rejection of the application or additional delays and costs in getting the refinancing approved.
At Guaranteed Rate, our team of lenders will work with you, so there is a clear understanding of the process when refinancing your home loan. For more information or to get started, see us at www.guaranteedrate.com.
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