7 Most Common Mistakes Made When Refinancing

 

1. Choosing to refinance with your existing lender without shopping around. Many homeowners mistakenly believe that it is easier to work with your current mortgage company, possibly because of the misconception that such loyalty is rewarded. However, your current lender may not have the best rates and programs. In fact, in most cases, even if you have been making payments regularly and on-time to your existing lender, they will still have to go through verifying your financial information all over again.

Because most mortgage loans are sold on the secondary market and are approved independently, your current lender will likely require the same documentation as any other company.

2. Not completing a break-even analysis. How does the cost to refinance compare to its potential monthly savings? Divide the total refinance cost by the monthly savings to determine the number of months you will have to keep the property in order to recoup those costs. Example: if your refinance costs $2000 and you save $50/month your break-even is 2000/50 = 40 months. In this case, a refinance is not your best option if you plan to stay in the house for less than 40 months.

3. Not obtaining a good faith estimate of closing costs (GFE). All mortgage companies are required to provide a detailed, written estimate of closing costs, known as a GFE, within 3 working days of completing an application.

4. Using the county tax assessorís value of your house. A market value appraisal is much more accurate and individualized than the value according to the government tax codes which often do not take into account improvements or other significant renovations made to the home. The market value quoted by an appraiser is the value mortgage companies use to determine whether they will approve the loan.

5. Not providing documents to your mortgage company in a timely manner. Should your mortgage company request additional paperwork for any reason, it is in your best interests to submit as soon as possible. In order to secure any locked-in interest rate, the loan must fund before the lock expiration date. Thus anything that could help expedite the application and approval process is best done in the most expedient manner.

6. Not getting a rate lock in writing. Always obtain a written statement detailing the interest rate, the rate lock time period and details about the loan program.

7. Getting a second mortgage before you refinance your first mortgage. Since many mortgage companies look at the combined loan amounts of a first and second mortgage, check with your mortgage company if you plan to refinance your first mortgage to see if obtaining a second mortgage will cause your refinance application to be denied.

What Should I Do If I'm Still Not Sure I Should Refinance My Home Mortgage?

If after reviewing this report you are still not sure whether or not you should refinance your home, then it is time to call on someone trained specifically to help you interpret your individual mortgage situation.

We Do This For You At No Cost or Obligation

The Personal Loan Consultants at Allegro Lending Source are trained to take care of all those details for you, and we will gladly meet with you at your convenience to discuss your specific refinancing situation. This consultation is absolutely free, and there will be no obligations or salespeople hounding you if you decide that it is not the right time for you to refinance.

Remember that refinancing your home mortgage does not need to be a tedious, overwhelming task. Call us at (832)476.3498 and let us show you just how quick and hassle-free creating increased cash flow through your home mortgage refinance can be!

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