If you have been putting off getting a refinance, the great news is, you still have time. Even with the current increase, refinance rates remain at the lower end of the spectrum.
While a refinance could be a great way to reduce your rate, not every refinance deal you come across is a great deal. With that in mind, here are some tips to avoid getting ripped off when refinancing.
Shopping around is okay.
Unless you are really loyal to your current mortgage lender, you have the right to look around for a lender that would give you the most practical refinance deal. On that note, be wary of advertisements and lenders promising that you’ll save thousands when you refinance with them.
Take note however that advertised rates are typically based on the ideal scenario, such that if a borrower’s financial circumstance is in tip-top condition and your credit score is stellar, warns a mortgage to refinance specialist in Utah.
He adds that to avoid getting blindsided, do your due diligence to find out what a potential rate would be for someone in your financial condition.
Make certain you’d really be saving money.
Ensure that you have a crystal clear view of all costs related to refinancing so that you could figure out your breakeven point, which is the amount of time it would take for your refinance actually to pay for itself.
To do this, calculate your closing costs’ overall sum and then divide it by the savings you could get every month.
Watch out for those junk fees.
These junk fees are called non-recurring closing costs and typically includes title fees, credit reports, origination fees, as well as lender’s underwriting and processing fees among others.
Ask about these fees and compare them against the loan estimates from different lenders since these could end up being a key factor in whether refinancing would make sense for you financially.
Before signing on the dotted line, consider whether a potential lender has responded to all your queries promptly and thoroughly and provided you with all the options that could be ideal for your specific case.