Mortgage Refinancing Mistakes to Avoid
Posted June 01, 2014


Refinancing a home mortgage can be about lowering monthly payments, taking advantage of lower interest rates, or buying points to reduce the interest rate on the remaining loan amount. Whatever the reason, a homeowner should keep in mind the following to avoid errors.

Avoid overvaluing the home. With the passage of time a home can increase or decrease in value, or stay in the range it was initially valued at. Some homeowners overestimate the value of the home based on the passage of time or renovations they've made while living there. Homeowners also forget how lenders assign value to a home, which includes only the home and land.

While in the process of refinancing, some homeowners may delay locking in a good mortgage rate by letting it expire. This can result in missing out on savings if interest rates are increasing. The homeowner may want to schedule the closing a few days before the expiration date, just in case an issue comes up and the closing is delayed.

Some homeowners start renovations on the home before the appraiser visits. Remember that the appraiser will base his appraisal on the condition of the home on the day the appraisal is done. The refinance may be cancelled if the home isn't in final condition.

If the homeowner fails to stay in touch with the lender during the refinancing process, the subsequent lack of communication may cause problems. The homeowner needs to be available for any requests or questions from the lender, providing needed information in a timely manner.

Some homeowners look only at the amount of their monthly payments as important in refinancing. The length of time the mortgage is financed should be considered also. Financial situations change over time, and a 30, 25, 20 or 15 year mortgage may be better that the term the homeowner initially chose.

Also, shop around for the best interest rate, avoid opening new credit or making large purchases, and make your mortgage payment on time during the process. If you are considering refinancing your mortgage, make sure you do your research and choose the right details for you particular situation.

Posted By: Michelle Keaton-Barrow
June 01, 2014 09:46 PM




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