Common Mistakes You Want to Avoid When Refinancing
Be it a change in income, a major life event, perhaps a global pandemic–for whatever reason when we find ourselves behind on bills, it can quickly become a snowball effect. In those cases, we may refinance our mortgages. Refinancing is the process of taking out a loan in order to repay another.
While this is fairly common, there are things you need to know about refinancing in order to avoid common mistakes.
#1. Failing to review your options.
Sometimes, people fall into the trap of getting a loan with their typical bank–and failing to review other options. While there may be comfort in that, it’s often not a wise financial decision. Mortgage pricing can be complicated–take your time reviewing your options before signing on the line.
In addition, you may fail to realize that you can face penalties if you don’t look quickly enough–especially if you pay the mortgage off too quickly. That’s often what homeowners want to do, and these lenders capitalize on it.
#2. Focusing on the interest rate and nothing else.
Interest rates are important, but they aren’t the only thing. Mortgage pricing isn’t just interest rates, it’s closing costs, fees, and credit scores. But you need to be mindful of advertised rates versus the actual rate.
You’ll first need to receive your Good Faith Estimate to finalize these costs. The Good Faith Estimate is a breakdown of the total cost of the mortgage.
#3. Lacking savings.
How long it will take your savings from refinancing to exceed what you paid in the refinance is called the break-even point.
In essence, this looks at what you paid in closing costs versus what you saved each month in refinancing. So, if you only save a small amount over an eight to 10 year period, you may have been more successful in selling the home and downsizing to a more manageable place.
#4. Timing mortgage rates only to miss out.
Like we watch the stock market, borrowers may watch the interest rates for the lowest prices. Unfortunately, in waiting for the next decrease, they end up seeing the market shoot back up again.
#5. Refinancing too much.
When mortgage rates are low, those who already have undergone refinancing may be eager to do it again. Unfortunately, and what many people don’t realize, is that refinancing costs money. And with the closing costs rising, it negatively affects the overall purpose of refinancing.
These mistakes are common, but that doesn’t mean they should happen to you. Mazzoni Karam Petorak & Valvano can help.
Avoid Refinancing Mistakes with MKPV Law
At Mazzoni Karam Petorak & Valvano, we want you to get the best possible outcome for your mortgage, one that fits your needs and won’t hurt you financially. We will negotiate with lenders on your behalf to make sure your costs are minimal. We’ll walk you through the refinancing process and will advise you on what your next steps should be.
Contact the Scranton refinancing mortgage attorneys at Mazzoni Karam Petorak & Valvano today for a free consultation. Serving clients in Lackawanna and Luzerne counties, Wayne County, Monroe County, and Pike County.