Compare Refinance Rates: Why You Should Do It

2007-03-08 10:33:40

( Financial )



When homeowners refinance their current mortgage, it is usually because they want to save money. They can save money by taking advantage of the low interest rates offered which would usually result in lower monthly amortization fees. However, you should not rush when refinancing your mortgage. You might make a mistake which would result in higher rates or higher monthly fees.

The very first mistake homeowners do when they want to refinance is they do not compare refinance rates. They just refinance with their old mortgage lender thinking that the processing will be faster that way. You have to keep in mind that your current mortgage lender may not offer the best rates in terms of refinancing. Compare mortgage loans by requesting quotes from different lenders. When you compare refinance rates with other lenders, you will have a clear picture of the best deals that are being offered in the market now. You also have to keep in mind that going with your old mortgage lender does not mean less paperwork. Refinancing your home still requires your mortgage lender to require paperwork because your mortgage is sold in an independent market and is approved there.

Another mistake homeowners make is not getting a good faith estimate from their mortgage lender. A good faith estimate will enumerate all the closing costs associated with refinancing your home. It will not be an exact figure, but it will give you an idea of the types of fees and the costs associated with refinancing.

After you compare refinance rates, you should always remember to read all the documents before you sign them. You can request copies of the documents a few days before signing so you can go through them. Reading the documents a few minutes before closing is not a good idea as you might miss a lot of the details that may surprise you at a later time.


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