How to Avoid the 7 Deadliest Mistakes Refinancing Home Mortgage Shoppers Make

"It's important that your mortgage refinancing is done for the right reasons, with your eyes wide open"

Everyday many people turn to a mortgage lender to help them refinance a home loan, however because many of them don't know all of the significant issues, they often make incorrect choices. By taking a few minutes to read through the "How to Avoid the 7 Deadliest Mistakes Refinance Shoppers Make" you can reduce or eliminate the chances of making a critical error and save thousands on your home mortgage.

1. Get The Best Refinance Home Mortgage Loan Rate

Make sure that you save enough on your mortgage refinancing to justify the process. It is best to seek low interest rate home loans, in order to decrease your existing interest rate by at least .75% to 1%. For example, this will save you about $100.00 a month on a $150,000.00 mortgage.

2. Know Your Refinance Closing Costs Up Front

Base on regulations, closing costs must be disclosed within 3 days of the loan application, however, there are different approaches to calculating them. Closing costs are initially estimated until the details of your specific home loan are obvious. For example: Gmac Home Loans may provide closing costs estimates. It is better to use a worst case scenario at the beginning then allowing yourself to receive an unpleasant surprise at the closing table.

3. Be Sure You Fully Understand Why You Decided To Refinance Your House

Many individuals refinance in order to get the best refinance home mortgage loan rate they can possibly get. You should be aware that simply getting a low interest rate home loan is not always to your advantage, so make sure that the gains from your rate reduction more than cover the related fees. There are, however, other legitimate reasons to refinance that may not be related to interest rates. Some are debt consolidation, home improvements, real estate investment trust or a major expense. Some of these choices may offer other financial or personal advantages, such as taking cash out to buy a car or to buy investment property, which is one the of the best uses of the money. This way you can build passive income. In this example, you may be able to claim your interest payments, property taxes, and any upfront cost for the mortgage refinancing on your tax return. Always consult an accountant or tax attorney before making these types of decisions.

4. Beware of “APR” Advertising

The letters "APR” stands for Annual Percentage Rate. Some mortgage brokers use “APR” gimmicks, teaser rates to get your attention; nevertheless, the home loan may actually end up costing you more. This is why it’s important to ask about it firsthand. Such interest rates are often derived by using a 30 year mortgage (a mortgage calculator is used for this) coupled with an accelerated payment plan. Most lenders allow you to select such a plan, if you chose. Know the actual interest rate that you will be paying when comparing mortgages. It is an excellent idea to compare interest rates from different brokers or lenders in order to find the best rate. You have 30 days to do this and the credit bureau will count it has one inquiry on your credit report.

5. Should I Consider an Adjustable Rate Mortgage?

Adjustable rate mortgages or “ARM’s,” can be very helpful in assisting people into the housing market. They can help lower your monthly mortgage payment; however, in the long run they can cost you more money as additional refinancing will be eminent since this loan will adjust.

6. Beware of Quality of Service From Mortgage Refinancing Providers

Refinancing mortgage loans can take from 3 weeks to a few months. You want the process to happen with as little hassle and in the shortest period of time. Ask your mortgage broker details about their service plan, performance guarantees and is the service fee negotiable.

7. Not All Mortgage Brokers Are The Same

Be sure to ask your mortgage broker about all their available loan products, terms and rates. A subtle difference can save or cost you thousands. Mortgage regulations have changed significantly over the last few years, making your options wider than ever. Subtle changes in the way you approach mortgage refinancing, and even small differences in the way you structure your home mortgage, can cost or save you literally thousands of dollars and years of expense.

Get the Right Information - Whether you are about to buy your first home, or are planning to make a move to your next home, it is critical that you be informed about the factors involved.

Most of us will seek the help of a mortgage broker when we refinance. Understanding the important issues will help in making an inform decisions in getting the best home mortgage refinance loan. You made a great decision in taking the time to acquaint yourself with the "How to Avoid the 7 Deadliest Mistakes Refinance Shoppers Make." I hope it helps you reduce or eliminate the chances of making a critical error and saves you thousands on your mortgage.