Stress Free Refinancing in Four Steps

With rates staying so low, you may be considering to refinance your home loan. However, make sure you're aware of the top four refinancing mistakes so that you can avoid them!

1. Refinancing When You Shouldn't
Maybe your neighbor told you about the amazing low rate they refinanced with, or the news you're seeing on Facebook and the internet are just making you anxious to join the party. Before you jump the gun, do some homework and make sure it's the right move. Figure out the breakeven point for when savings outweighs the cost of refinancing. More importantly, determine how long you plan to stay in your current home - it's usually a mistake to refinance on a home you're not planning on staying for several years.

2. Choosing the Wrong Loan Type
After you figured out you want to refinance, take time to establish what your objective is. Do you want to lower your overall payment regardless of the length of the loan? Do you want to be debt-free by a certain year? Consider the cost of the refinance in comparison to the financial benefits - is it worth it? Once you've answered these questions, talk to a loan officer to hear what type of loan will help you accomplish your goals.

3. Not Knowing Your Real Rates
When you're looking at rates, make sure you're comparing your APR (annual percentage rate) to know what your true rate will be. Check out our website to see a comparison of rates from various lenders to see which lender offers you the best rate. APR is calculated to include closing costs into the estimated finance charges on the mortgage. Lenders must advertise an APR along with a rate so you can see if there is a big spread between the APR and the actual interest rate being quoted. A simple rule is that the larger the spread is, the more closing costs are associated with the loan.

4. Not Keeping Up With Your Borrower Responsibilities
As your lender, you rely on heavily on us; however there are some obligations you have to take care of on your own. Make sure you have decent credit and avoid taking on any more debt, even after the refinance has been approved. We can and will check your credit again before the loan closes to ensure you have not taken out additional debt that we are unaware of. Also, to make sure you get that low rate you worked so hard to find, check your lock-in dates so that you secure that interest rate, and make sure you turn in all documentation that's needed as soon as it's requested so you don't delay your closing date, jeopardizing your interest rate.