Mortgage rates have been at an all-time low due to many homeowners refinancing their homes. While there is an excellent possibility that you may be able to save a lot on your mortgage payments, it doesn’t necessarily mean that you should rush to refinance your home. The process can be quite rigorous and a small mistake can end up costing you a lot. Before going into the market to get a better deal for your home, have a look at some common refinancing mistakes that people make.
Being Unrealistic About the Value of Your Home
The real estate crisis of 2008 resulted in home values reaching an all-time low, which devastated the equity of millions of homeowners. Housing prices have started to rise over the past couple of years. However, this doesn’t mean that you can afford to make assumptions about the value of your home. It would be best to remain cautious when in placing a value on your home, as overestimating the cost can negatively affect your refinancing process. There are a couple of ways to get an accurate idea of the value of your home: speak to your local real estate agent or use the various online valuation sites for assistance.
Not Exploring Your Options
One of the biggest mistakes homeowners make is not properly exploring their mortgage options. It is surprising how many borrowers contact their existing lender(s) when seeking to refinance. It is highly recommended to shop around for lenders offering the best mortgage refinancing rates. Saving even half a point on your interest rate can save you tens of thousands of dollars throughout your loan.
Not Considering All Costs
Lowering minimum monthly mortgage payments is one of the main aims for homeowners who are looking to refinance. However, it is essential to check all the fees associated with the refinancing process. Not giving special care to these costs may result in you paying more than you initially thought. Many mortgage lenders offer no closing costs on refinancing; however, you have to be careful because they might include these costs in your mortgage.
Refinancing Too Frequently
With interest rates near record lows, many homeowners are tempted to refinance their homes again after having recently done so. On paper, this might look like a good deal but may lead to financial instability in the future. Every time you refinance your home, there are costs involved. As a general rule of thumb, you will typically pay 3-6% of the loan balance in closing costs. So, for refinancing to be feasible, you should be able to save enough interest to cover these expenses.
By avoiding these four common refinancing mistakes, you can be sure to get a loan with a great rate that fits your needs. Visit our website at www.texastrustloans.com to see if a home refinance loan makes sense for you.