7 Costly Mortgage Refinance Loan Mistakes to Avoid

When applying for a mortgage refinance loan, you will need to do some homework to be certain you are getting the best deal and not making costly mistakes.

1. Not Staying on Top of Your Finances

Staying on top of your finances will help you avoid higher interest rates or even denial of the mortgage refinance loan. You can request copies of your credit report from the three credit agencies. Then you will have an opportunity to review them and even dispute some discrepancies. Paying down credit card balances and making payments on time will help you boost your credit score and chances of getting approved for a mortgage refinance loan.

2. Not Shopping Around for the Best Deal

Many lenders will make offers to you throughout the duration of your search. Comparison shop so you can evaluate all the features of each loan offer. The one you choose may not even be from your preferred bank or lender. You will want to look at the interest rate or Annual Percentage Rate (APR), and closing costs. Always look at the fine print of any offer.

3. Thinking Your Property's Assessed Value Determines the Amount of the Loan

Your mortgage refinance loan will not be based on this amount, which is determined by the local county tax assessor. Instead, the lender will use another value, which is called the sales comparison or cost approach.

4. Not Getting a Good Faith Estimate From the Lender

This estimate goes over the closing costs, any fees and hidden fees associated with your mortgage refinance loan. You should have it within three business days, but can ask your lender for one earlier.

5. Not Using a low Value Home Appraisal

There is a method used by lenders called the automated valuation model (AVM) that compares other neighborhood houses to find an average value. If you believe that your home is not that valuable, do not pay for the assessment. Your lender can appraise the property using the AVM method.

6. Signing Documents Without Reviewing Them

Never sign any documents without properly reviewing them first. Double-check everything before you sign them. Read the terms and conditions, and if possible, ask for a copy of everything before the official signing date for review that can be done on your own time.

7. Not Providing Important Documentation on Time

Do not delay in getting your documents to the lender in a timely manner, as the rates of your loan may increase before you reach the signing stage of the closing process. Submit these documents when the lender asks for them.

Be sure to get everything in writing. Making one of these mistakes could cost you thousands of dollars. Research the best you can before beginning the mortgage refinance loan process and visit www.mortgage101.com for more information on what you can do prior to starting, get advice, and research the current rates.