Common Mistakes Borrower's Make in Mortgage Refinancing

By Kelly Richardson
Home Worth Columnist

Send to a Friend | Printable Version

In a complex mortgage refinancing process, it's easy to become confused with technical jargon and complex conditions. And a mistake here could cost you thousands of dollars, not to mention your home. Here are some common mistakes that borrowers make when entering into a mortgage refinancing agreement.

Unless real estate financing is your profession, you might not be confident enough to call the shots when it comes time to refinance your home. Handling your mortgage is a delicate matter; and in a mortgage refinancing, your home is on the line. But by knowing the most common pitfalls in advance, you can decrease your chances of making a mistake and increase your chances of saving money. If done right, refinancing your mortgage can improve your financial situation dramatically. Here are some things to look for.

Mortgage Refinancing No-nos

• A Proper Appraisal. Do your homework and get a couple of different appraisals for your home's value. This will give you a better idea about what to expect when your lender sends out their appraiser. If your lender doesn't get close to your other estimates, you might consider taking your business elsewhere.
• Shop Around. Mortgage refinancing deals will vary widely from lender to lender. And advertised deals and specials don't necessarily mean a better deal for you. Sometimes you're better off going with an established lender that doesn't try to woo you with promises of low APRs and no closing costs.
• Set Limits. In most cases, mortgage refinancing is done to pay off high interest credit cards or to make home improvements. Whatever your reason is, determine the amount of money you'll need and stay within your planned boundaries. Just because you can borrow more money doesn't mean that you should.
• Know the Terms. It is absolutely vital that you know the terms of your refinancing agreement and what exactly is expected of you. This includes percentage rates and repayment requirements. If you're unsure of any portion of the agreement, ask the lender to go over it with you in detail.

With a little bit of knowledge and persistence, your mortgage refinancing agreement will go off without a hitch. But leaving the process solely to your lender might give you more than you bargain for in the end.

About the Author
Kelly Richardson covers the real estate scene in major cities across the country. His articles appear in educational journals, periodicals, and e-zines.