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Mortgage Refinancing Do’s and Don’ts to Consider, Part 2

mortgage refinancing form, calculator and piggy bank

In Mortgage Refinancing Do’s and Don’ts to Consider ( part one ) of this two-part do’s and don’ts mortgage refinancing series, we went over many of our do recommendations. There are several specific boxes you should be sure to check during any mortgage refinance, but also a few major areas or practices you should be steering clear of as well.

At Primary Residential Mortgage, we’re proud to offer robust services when it comes to any mortgage refinance you’re in need of. We’ll steer you toward the proper actions and documentation areas while keeping you well away from any of the potential pitfalls involved in this process. Today’s part two of our series will dig into several major don’t areas we’ll help you avoid during a refinance.

Send Too Many Applications

While doing your due diligence and examining multiple potential refinancing resources is a prudent move, you should be very careful about sending too many actual refinancing applications. This is because every time you send in a new application for a refinance, the lender will require a credit report – and constant credit report requests will lower your credit.

Over time, this will limit your borrowing power. For this reason, we only recommend sending in an application when you’re sure you want to proceed with it.

Focus Solely on Interest Rate

No one is denying that for any refinance, interest rate is an important factor. At the same time, know that it’s not the only one to keep an eye on.

There are many other variables here as well, including closing costs, origination fees, credit fees and several potential others. Simply finding the lowest rate won’t always lead you to the best possible refinancing situation depending on your goals. While it’s definitely worth investigating thoroughly, be sure not to focus solely on it.

Refinance Without Research

Some homeowners are in such a rush to refinance that they don’t stop to consider whether this is actually the prudent move. They’re often sucked in by advertising noting all the benefits of refinancing – but aren’t taking the time to apply their own circumstances to the situation.

With any refinance, it’s important to research all the details. Ensure rates will remain constant, for one, and find out about fees or issues with the old loan that might make a refinance costlier than it appears on the surface. This is a process our loan officers are happy to help with.

Overlook Mortgage Insurance

Finally, don’t forget about private mortgage insurance, which is a factor for both original mortgages and refinances. If your refinance includes borrowing over 80% of the property value, you’ll likely have to pay PMI until you reach 20% equity or a point near to it. This can be a significant expense that must be considered along with the refinance rate and other fees.

For more on do’s and don’ts in any refinancing situation, or to learn about our mortgage services or home loan products, speak to the staff at Primary Residential Mortgage today.

*PRMI NMLS 3094. PRMI is an Equal Housing Lender. Some products and services may not be available in all states. Credit and collateral are subject to approval. Terms and conditions apply. Programs, rates, terms, and conditions are subject to change and are subject to borrower(s) qualification. This is not a commitment to lend. Opinions expressed are solely my own and do not express the views of my employer.

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