For some, starting the mortgage refinance process can be quite difficult and intimidating. Whenever you are ready to trade in your current mortgage for a new one, make sure that you choose one that helps you reduce your rate and help you build equity faster. Many home owners make mistakes during this process which results in higher cost. Learning what some of the common mistakes are, and how to avoid them, will help you make the best choice when it comes to refinancing.
Below you will find further information from the best mortgage lenders in GA, regarding the refinancing process and how to avoid making common mistakes.
1. Failing to optimize your credit score.
One of the most important criteria used by mortgage lenders is your credit history. Even a one-point credit score increase can reduce your mortgage fees by one point. For example for every hundred thousand dollars financed you will see a $1,000 reduction. Before you start the refinance process make sure you have your credit reports in order.
2. Failing to compare lender rates.
Research indicates that nearly half of all homeowners request a quote from just one lender. Homeowners that obtain quotes from different lenders can reduce their interest rate by as much as 0.5%. So if your local bank or lender doesn’t offer a better deal make sure to compare rates and fees from other lenders before you decide on one.
3. Using home equity too aggressively.
Homeowners make the mistake of using their home equity in order to accomplish financial goals. One common mistake is financing short-term expenses with a long-term loan. You should only refinance your home’s equity if you can guarantee good returns in the long run.
4. Verifying the current market value of your home.
Many homeowners underestimate the current value of their homes and this happens because many homeowners do not realize how much home prices have risen since 2012. If you fail to accurately estimate the price of your home, you will simply pay too much to refinance your mortgage. Proper equity value will help you obtain a lower interest rate. On the other hand if your estimate is too high you will not get the desired rate as less equity means higher rates.
5. Not negotiating refinancing fees.
Besides negotiating interest rates, other rates may be negotiable including title and escrow fees. If you have good credit and have checked multiple offers, you should have enough leverage to get a better deal.
6. Refinancing too often.
As mortgage rates continue to drop, homeowners that have recently refinanced their homes may be tempted to refinance once again to get a better deal. While this may seem like a good idea, it may not be a good choice for everyone. Frequent refinancing will extend your mortgage term while yielding little to negative savings in some cases.
Moreira Team is here to help you make the refinancing process easier. Our qualified mortgage lenders will assist you every step of the process to ensure you make the right choice based on your needs and budget.