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Questions and Answers
Question: How can you avoid the top 5 refinancing mistakes?
More
and more people are looking to refinance their homes to convert
their ARM into a fixed mortgage rate. And why not? Refinancing can
save you a bundle of money over the life of your mortgage loan. The
only problem is that if you do not refinance correctly, you could
end up losing money on the deal. To prevent this I am presenting the
top 5 refinancing mistakes that people make. Learning these mistakes
can make sure that you get the most out of your refinancing.
Failing To Choose The Best Refinance Loan
There is more
than one refinance loan out there. There are fixed-rate loans,
adjustable rate refinance loans, hybrid loans, etc. The loan that is
best for you is going to depend on your situation. For example, in
some cases a 15-year term is better than a 30-year term and
vice-versa. It's easy to find out which refinance loan is best for
you. Just contact me for a free no-obligation customized quote and
see which loan is best for your particular situation.
Not Doing A Break-even Analysis
For refinancing
to make sense, you have to see how long it will take for you to
realize your savings. To do this, you need to do a break-even
analysis. A simple way to do this is to divide the total cost of the
loan by the monthly savings. This will give you the number of months
that you will have to stay in the property to break-even on your
refinancing costs.
Paying Too Much For Mortgage Insurance
Mortgage
insurance, or PMI adds a lot to your mortgage payment. But you don't
have to pay PMI if you have an 80% equity stake in your home. If you
refinance at less than 80%, then you could wind up paying too much
for PMI. So, if you already have 80% invested in your home you
should not refinance below that level. In other words, don't cash
out above the 80% level.
Fixed vs. Adjustable Rate
When most people
think of refinancing, they think of refinancing at a fixed rate. But
in some cases an adjustable rate can actually save you money - even
if interest rates go up. Adjustable rates are not always easy to
follow, but you can contact me to help you decide if an adjustable
rate can save you money over the life of the loan or if a fixed rate
is best.
Not Shopping Around For Other Refinance Lenders
For
convenience, a lot of people simply refinance with their current
lender. This can be a mistake because your current lender may not
have the best rates and may not be able to offer you all the
refinancing programs available. A Mortgage Broker like me has the
ability to obtain wholesale rates and get you the best deal for your
situation by shopping many different lenders and options.
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