Top 10 Mortgage Refinancing Mistakes
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10 Mortgage Refinancing Mistakes You Should AvoiD At all costs
With rates bouncing off historic lows and expected to go higher, now may be the time to borrow mortgage money or refinance your existing home loan. But whether you’re a novice or you’ve been to this road a bunch of times, it’s still easy to make some mistakes on mortgages. Here are some mortgage refinancing mistakes you really need to keep an eye out for.
1. Not looking at your own credit score/report before showing it to a lender
You wouldn’t think of going on a job interview without looking at yourself in the mirror, right? But why would you think of showing your credit history to a lender when you haven’t looked at it yourself? Pull your credit history at least 6 months preferably a year in advance. Clean it up and fix any problems–you’re going to get a much better deal on that mortgage. We offer our clients a free credit review.
2. Not getting pre-approved
Would you hop in the car without your wallet and go to the mall? Well, that’s exactly what you’re doing if you shop for a house while not being pre-approved for a loan. First, you get pre-approved and then you go shopping.
3. Not shopping for the best deal
Would you buy a $200,000 pair of pants without seeing that you could get them for less? According to a recent study, nearly half of borrowers don’t shop for a mortgage. You need to shop, better yet, put lenders against each other with help of a professional mortgage broker.
4. Focusing on rate and ignoring fees
Mortgages are often loaded with fees. Although shopping for a dream home is more fun than shopping for a mortgage, the mortgage is just as important. So learn the ropes by seeking help from mortgage companies that you trust. Same rules apply to mortgage refinancing in Toronto or any other part of GTA
5. You are not able to refinance above 80%
Do not expect to be able to refinance if your loan value exceeds 80% of your home value.
6. Changing loans for 10 basis points
Don’t change to an identical product with another lender just to save 10 basis points. Once you factor in all the fees and charges, you may be worse off.
7. Borrowing too much
Don’t borrow more than you need to face repayments that you can’t afford.
8. Choosing fixed or variable rates without care
Think carefully before changing from fixed to variable or variable to fixed if just to take advantage of that rate at that moment only to regret it when interest rates change again.
9. Rolling over smaller debts
Do not forget of rolling smaller debts into your home loan and then extending the term of the loan, so you are paying interest lower interest and increase your cash flow.
10. Not changing your spending behavior
Don’t choose to refinance and draw equity to pay off credit cards without changing your spending behavior.
When it comes to refinancing your mortgage, being aware of the common mortgage refinancing mistakes greatly helps in making the necessary processing as smooth as possible. You can avoid extra costs if you know the things that you should do and those that you shouldn’t.
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