Mortgage rates are on their way back up again, and with that in mind, many people are looking into the possibility of refinancing a mortgage. At Primary Residential Mortgage in Fort Myers, our mortgage loan officers are here to help you determine whether a refinance might be the right decision for you.
There are a few pitfalls some people step into during the refinancing process, and these can turn a refinance from a good idea into a bad one quickly. Here are some of these common mistakes, and how you can stay away from them.
Refinancing is often done to change the term of a given mortgage, which can generally range anywhere from 10 years to 30 years. Some refinancing projects look to lengthen the term, which will lead to more interest over the life of the loan but smaller, more manageable payments each month.
Shortening the loan term, on the other hand, will reduce the overall interest and cause the loan to be finished sooner, but will require higher monthly payments to make this happen. Misunderstanding which of these options is right for you could actually put you in a much worse financial spot than you began in, and this is what our brokers and online rate calculators are here for.
Overestimating the value of your home can ruin your refinance as it gets started. A home’s value is the number around which you’ll plan numerous parts of your financing, and you need to have 20 percent equity in the home before refinancing is generally approved. Use online listings and real estate agents in the area to set a realistic valuation.
Refinancing is meant to save money, but these savings could evaporate in a hurry if you forget about things like the application fee, loan origination fee, appraisal fee, title fee and any attorney fees involved in the process. These can be built into your refinancing, so make sure not to overlook them.
Holding out for an even lower rate than what’s available might end up as a profitable move, but it might go in the opposite direction as well. Rates can start to climb, and you could be priced out of a good refinance quickly. If there’s a rate available that works for you, lock it in – you can always refinance again later if rates continue to drop.
For more information on refinancing or any of our other programs, speak to the mortgage loan officers at Primary Residential Mortgage today.
*The views and opinions expressed are my own and do not necessarily represent the official policy or position of Primary Residential Mortgage, Inc.