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How To Avoid Common Mortgage Refinance Mistakes?

Mistakes To Avoid When Refinancing Home-Texas Trust Home Loans

Mortgage rates are at an all-time low and a time where many homeowners consider to refinance their homes. While there is a good chance 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. It can be quite a rigorous process, and a small mistake can end up costing you a lot of money and time. Before entering the market to get a better rate for your mortgage, have a look at some common mortgage refinance mistakes people make.

You Have an Unrealistic Value for Your Home

The real estate crisis of 2008 resulted in house values reaching an all-time low. The equity of millions of homeowners went down the drain. Real estate prices have begun to rise in the past couple of years. However, it doesn’t mean that you can make assumptions about the value of your home. When placing a value on your home, an overestimation can negatively impact your refinance process. Therefore you should be very cautious when estimating. There are several methods to get an accurate estimate of the value of your home. The first of these is to speak to a local real estate agent. Local real estate agents are well informed about the housing market that your home is situated in and can provide a reasonable degree of certainty to the estimated value of your home. Furthermore, there are a variety of home evaluation sites on the internet, which can also assist you in determining your home value.

Not Exploring Your Options

A mistake that many homeowners make is that they do not explore mortgage options. Many borrowers contact their existing lenders when they want to refinance rather than looking around for new lenders who may offer significantly better interest rates. We highly recommend you shop around for lenders who provide the best refinance rates. This can potentially save you tens of thousands of dollars throughout the period of your loan.

Not Considering All Costs   

Homeowners aim to lower their monthly minimum mortgage payments by refinancing. However, while doing so, you should be sure to check all the fees that are associated with the refinance process. By missing these fees, you may end up paying more than you thought. A variety of mortgage lenders offer no closing costs on refinancing, but we recommend you be careful as they can have these costs included with your mortgage.

Refinancing too Frequently

In recent times, the market interest rate has reached an all-time low. This low has tempted many homeowners to refinance their homes shortly after refinancing it. This may seem like a good deal at first. However, this may lead to financial instability with the homeowner. The reason this occurs is that every time the homeowner refinances, there are additional fees and costs that are involved. As a general rule of thumb, 3-6% of the loan balance is paid during the closing costs. Therefore, for refinancing to be the right decision, you should be able to save enough on interest rates to cover the fees and expenses that come with the process of refinancing.

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