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| Seven Of The Most Common Refinancing Mistakes |
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| Written by Harvey Warner |
| Thursday, 19 May 2011 08:59 |
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Refinancing is always the first thing on people's minds when interest rates go down. Whether you're looking to trim your mortgage payments, eliminate credit-card debt or pay off your car loan, experts say you should fully understand all of the options available to you before deciding to refinance. Allied Mortgage Consultants is an up and coming mortgage firm that helps fill consumers in on the nitty gritty of home loans and refinancing, and they have offered us their seven most common mistakes in refinancing everybody should avoid. Not saving enough to justify refinancing. The decrease in your rate would ideally by no less than .75 percent. This will save you about $100 a month on a $150,000 mortgage. Insist on transparency and know your discussing closing costs. A lot of people are so non-confrontational they neglect this, but the law requires that a consumer know his/her closing costs three days or less after loan application. But there is no exact way to calculate them. The closing costs you will be informed of are not exact figures - they are estimates, and you have to insist on knowing your loan's specifics as well. Do not be overly optimistic. You have to know why you are requesting refinancing. Besides reducing your interest rate, there are other legitimate reasons to refinance, such as debt consolidation, home improvements or major purchases. In some cases, you may be able to deduct your interest payments on your tax return. Such decisions need to be made with expert counsel, such as a tax lawyer or accountant. Some companies offer APR "teaser rates" but they are just that - teaser rates. Some mortgage brokers use annual percentage rates to get your attention, but it may actually end up costing you more. The APR is usually calculated when a 30-year mortgage joins forces with an accelerated payment plan. Make sure you know your annual percentage rate for the entire duration of your loan and do not get blinded by these catchy promotional offers. Another mistake would be failing to be informed about ARMs. A lot of us do not know what they are, and this might end up costing a lot on a long-term basis. While they may reduce your monthly payment, this would only be if there is additional refinancing. Not being aware of the service you should expect from a mortgage broker. Many of us don't, and end up choosing the wrong broker as a result. Ask your mortgage broker to provide details of its service plan and performance guarantees. One last common mistake would be not knowing the right questions to ask about all your loan options. Because if you fail to do so, you may end up spending more over a minute detail you failed to ask about. About the Author: Saving Money Tips shows you how to stretch your investment dollars with no-load mutual funds. Kindly provided by LJ-Marketing.dk You are welcome to use this article on your own website, if you include the link just before this text. |
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