One of the most important tips to know when you decide to refinanceis: “never rush.” A lot of people end up paying more than they should or not getting what they originally intended to have with their re-mortgage because of inadequate planning, or going over the processes without exploring other options.
It is important to keep in mind that when you refinance, you are:
a) restarting your mortgage clock; andb) you are spending money.
Since the Consumer Financial Protection Bureaustarted accepting mortgage complaints in 2012, they have been receiving many complaints about refinancing-gone-wrong. The most common reported grievances include:
- not getting the terms they had been promised due to faulty, double-dealing, or misleading ads
- paying an unreasonable amount of money at closing
- aggressive marketing of loan products with hidden features which results to disappointments
Many of these collective complaints were gathered from veterans but the misfortune could extend to unsuspecting borrowers.
If you don’t want to fall victim of these scams, or pay an excessive sum due to not knowing enough, the following tips could prove handy when you decide to refinance:
DON’T FALL TO SWEET TALK.
Remember that a lender’s first interest is still the profit they can gain from your loan. If a deal sounds too good to be true, scrutinize the details. Never fall confident or automatically trust even if an ad seems straight legit. Scammers and fraudulent deals these days are often unrecognizable from the authentic ones. It pays to pay attention to the details.
Know your refinance options!
READ THE FINE PRINT.
It’s an advise that keeps popping up in every tip list, but are never strictly followed. Review the terms and conditions. Ask questions for the little things that concern you. You don’t want to get in trouble with hidden charges and fees. Go over the loan documents before placing your signature on the dotted line.
KNOW YOUR LOAN.
What are its terms and requirements? What are the guidelines? Is the interest too high? Why is this so? Why are some rates higher than the others? What risks are being compensated? Use these pieces of information to compare lenders and offers before you settle into a choice and forward your application. Remember that you cannot just apply to different lenders all you want. When lenders pull out your credit from the credit bureaus (an inquiry), this will have a negative impact on your score. The more inquiries there are, the worse it will be for your score. So be decisive and calculate your move before doing anything.
DO NOT LIMIT YOUR OPTIONS.
No, you are not strictly required to refinance with the same lender. You can shop from other lenders as well. Furthermore, it’s important to know that banks are not the only places where you can get a refinance from. You can also refinance with your local credit union or your local small time lenders. Inquire around, call people, ask recommendations from friends. Then narrow down your list to a few reputable ones that have offers which correspond to your needs.
Again, take your time. Be methodical. Keep all the information you need organized and if possible (and most recommended), ask the help of a professional.
Don’t let your doubts and fears stop you from getting a successful refinancing.