| 1. |
Refinancing you existing first or second mortgage without shopping around.
Your existing mortgage lender may not have the best rates and terms to fit your current financial goals. In most cases the documentation for the refinance will be the same so do not let that stop you from shopping for someone that is going to do what is in your best interest. |
| 2. |
Not getting the costs broken down in a good faith estimate of the closing costs.
A mortgage company is required by law to provide this to you within three days of completing the application.
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| 3. |
Not getting a break-even analysis.
Because there are costs in refinancing, it may not be in your best interest to refinance even if you are reducing your monthly payment. A break-even analysis will tell you how long it will take you to recover the costs of refinancing. If you are going to be moving in a few years you should look at a no cost refinance.
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| 4. |
Using the value that the county gives your property for tax purposes as current market value.
The value that the county gives your property for tax purposes does not have any correlation to the current market value of your home today. An appraisal will tell you approximately what a willing buyer has paid for homes similar to yours.
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| 5. |
Paying for an appraisal when you know the value of your home is lower than you need to get a specific loan.
Some mortgage companies will tell you that your home is worth a lot more than it really is just to get a loan. Have the mortgage company talk to their appraisers and insist that they show you that the value will be what they say it will be before you pay for the appraisal.
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| 6. |
Not giving the loan documents to your mortgage company in a timely manner.
Not supplying needed information in a timely matter lengthens the process.
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| 7. |
Not getting the rate lock from the lender or broker in writing.
If you want to lock your rate make the mortgage company put it in writing. This should include the rate, term and type of loan product that you want.
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| 8. |
Drawing on your Home Equity Credit Line before you refinance your first mortgage.
Many lenders that can give you the lowest rate are able to do so because they have seasoning requirements on cash advances. If you are going to refinance talk to our mortgage company before you draw on your Home Equity Credit Line.
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| 9. |
Getting a second mortgage before looking at refinancing your first mortgage.
If you are able to refinance your first mortgage up to 80% of your home's value, you will be able to get a lower rate than you would normally get on a second mortgage. As a result, your payments and interest expense would decrease.
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| 10. |
Signing documents without reading them.
ALWAYS READ THE DOCUMENTS THAT YOUR LENDER OR BROKER GIVES YOU BECAUSE AN EDUCATED CONSUMER IS THE BEST CONSUMER.
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