Five Common Refinancing Blunders and How to Avoid Them

When you think of refinancing, you automatically think of saving. It allows you to lower your current interest rate and reduce the loan term. Some refinancing options even allow some cash-out. The goal is to save more money.

While this is true, it is not always that when you refinance you actually save money. Situations vary per borrower. There may be times when situations aren’t suitable for refinancing. And that, instead of saving more money, it actually costs you more than just staying with your current loan.

HERE ARE FIVE BLUNDERS WHICH BORROWERS COMMIT WHEN REFINANCING. LEARN ABOUT EACH ONE AND FIND OUT HOW YOU CAN EFFECTIVELY AVOID THEM.

  1. REFINANCING ALWAYS SAVES YOU MONEY.

This is not always the case.  You immediately rush to refinance after learning that the current interest rate in the market is lower than what you now have. What you fail to see is that aside from the interest rate, there is also the cost of the refinance you need to pay.

Avoid it by:  First, comparing your current interest rate with the present market interest rates. Then, calculate the cost of the refinance. This does not have to be paid upfront. Nevertheless, you need to include it to the total cost. Refinancing costs may include application and origination fees, appraisal and inspection charges, documentation fees and other third-party fees.

After computing all costs plus the new interest, determine if and when you will break even. Only then will you know whether you actually save or not.

  1. REFINANCING WHILE HAVING A BAD CREDIT SCORE.

Although refinancing may help you afford the loan better by bringing down the interest rate, this may be hard to achieve if you have a bad credit score. In worse cases, you may end up with a loan that is more expensive than the one you currently have.

Why? Your credit score is a big factor that comes into play when you get a loan or when you refinance one. When your scores aren’t as stellar, you may be asked to pay for a larger down payment or be offered a higher interest rate.

Avoid it by: Fixing your credit scores first. How? Examine your credit report and identify where the damage is originating. If you have missed payments, try to keep them current. If you have too many credit cards, consider keeping only the necessary few. In general, conventional loans require a score of 660. If you want to save more, aim for a score higher than that.

  1. NOT SHOPPING FOR LENDERS.

Sure, your current lender may have good refinance programs. This does not necessarily mean that you have to stick with them if you wish to refinance. Shopping around and comparing  lender to lender will actually do you more good. Yes it can be a little laborsome, but if it’s worth having it’s worth working for.

Avoid it by: Shopping for Lenders. One easy way is by asking a Loan Estimate from each lender. This is a paper document that shows all the necessary information you need to know about the loan. It includes the total money you’ll shell off in the refinance.

Start shopping for a Lender.

Since the Loan Estimate has a standard format, comparing the details is simple. Once you have shortlisted the programs having the best offers, it’s time that you compare it with your current loan. This way, you’ll find one where you can save the most money from.

  1. NOT LOCKING IN THE RATE.

When you refinance, you choose not to lock in just yet for the possibility that it may dive further down. The truth is, the rate is always fluctuating. There is no sure way to find out when the rates will go low or when they will shoot up.

Avoid it by: When you already have a rate that you think is affordable enough, don’t hesitate to lock it in. Doing the opposite (which is actually not doing anything) is a gamble. Lock-ins can have a 30-day or a 60-day period. The longer the period, the higher lock-in fee is. This why you also need to consider the fee. It the end, you have to put in mind that a fee is fixed while an adjustable interest rate can be very unpredictable.

  1. FORGETTING ABOUT THE LOAN TERM.

Many borrowers fixate on the present interest rates – ‘When it’s low, it’s time to refinance.’ What they forget is that adjusting the loan term may help just as much. When it comes to saving, how short (or how long) a term is can mean a huge difference.

Avoid it by: Try to calculate the projected savings. Compare your present term and the adjusted loan term. A lot of loan website offer an online calculator. But it isn’t so hard to actually do the math. Here’s how:

                    Current Loan:    (monthly payments x no. of months to pay) + (total loan cost)

Minus the New Loan:           (new monthly payments x no. of months to pay) + (total refinance cost)

The difference is the projected savings you will have with the new loan term.

Mistakes can provide opportunities for learning. But when it comes to loans, learning from others mistakes is better than actually committing them yourself and suffering the consequences. Refinancing should save you money, not the opposite. Avoid these common refinancing blunders.

Looking for Refinance, Find a Lender Here.

 

98 thoughts on “Five Common Refinancing Blunders and How to Avoid Them

  1. Pingback: sildenafil vardenafil tadalafil

  2. Pingback: mba application essay writing service

  3. Pingback: essay writing service review

  4. Pingback: essay writing website reviews

  5. Pingback: what are the best essay writing services

  6. Pingback: help writing a comparison and contrast essay

  7. Pingback: help writing an essay for college

  8. Pingback: reviews for essay writing services

  9. Pingback: what should i write my essay on

  10. Pingback: essay writing services recommendations

  11. Pingback: online essay writing services

  12. Pingback: essay writer services

  13. Pingback: need help in writing an essay

  14. Pingback: custom essay writing service toronto

  15. Pingback: best writing services

  16. Pingback: alprazolam 2 mg online pharmacy

  17. Pingback: direct rx pharmacy

  18. Pingback: reddit best online pharmacy

  19. Pingback: viagra online india pharmacy

  20. Pingback: trusted online pharmacy tramadol

  21. Pingback: truth behind generic cialis

  22. Pingback: viagra tablets price in uk

  23. Pingback: tadalafil mechanism

  24. Pingback: genpharma tadalafil

  25. Pingback: pinkviagraforwomen

  26. Pingback: cialis generic viagra

  27. Pingback: 150 mg viagra for sale

  28. Pingback: cheap cialis uk

  29. Pingback: sildenafil 100mg india

  30. Pingback: where to get viagra pills

  31. Pingback: cialis and blood pressure

  32. Pingback: cialis in us

  33. Pingback: rx pharmacy richland

  34. Pingback: tramadol thailand pharmacy

  35. Pingback: mail order viagra canada

  36. Pingback: where to buy liquid cialis

  37. Pingback: cialis 100mg from china

  38. Pingback: buy viagra online

  39. Pingback: research chemicals tadalafil purchase peptides

  40. Pingback: us pharmacy viagra online

  41. Pingback: where to buy viagra otc

  42. Pingback: buy viagra pay with paypal

  43. Pingback: viagra for woman

  44. Pingback: buy brand viagra online australia

  45. Pingback: viagra tablet canada

  46. Pingback: viagra pills prescription

  47. Pingback: tadalafil warnings

  48. Pingback: cialis prices at walmart

  49. Pingback: cialis 5mg 10mg no prescription

  50. Pingback: can i buy cialis over the counter at walgreens

  51. Pingback: metronidazole ehow

  52. Pingback: gabapentin 500

  53. Pingback: gino bactrim

  54. Pingback: episodic valtrex

  55. Pingback: tamoxifen floxed

  56. Pingback: pregabalin for shingles

  57. Pingback: lisinopril schwitzen

  58. Pingback: metformin compatibility

  59. Pingback: lasix meniere's

  60. Pingback: 50 units of semaglutide

  61. Pingback: rybelsus weight loss in non diabetic patients

  62. Pingback: forgot to take rybelsus

  63. Pingback: can i overdose on escitalopram

  64. Pingback: best generic lexapro manufacturer

  65. Pingback: zoloft antidepressant

  66. Pingback: favism metronidazole

  67. Pingback: cymbalta in pregnancy

  68. Pingback: cephalexin 500 mg para que es

  69. Pingback: how to get real viagra

  70. Pingback: difference between fluoxetine and duloxetine

  71. Pingback: impetigo keflex

  72. Pingback: gabapentin dihydrocodeine

  73. Pingback: is it safe to take 60 mg of fluoxetine

  74. Pingback: accidentally took ibuprofen with ciprofloxacin

  75. Pingback: cephalexin side effects 500mg

  76. Pingback: can amoxicillin treat bv

  77. Pingback: ddavp dosing for uremic bleeding

  78. Pingback: allergic reaction to flomax

  79. Pingback: diclofenac sod ec 75 mg

  80. Pingback: effexor xr

  81. Pingback: losartan (cozaar)

  82. Pingback: citalopram 20 mg para que sirve

  83. Pingback: flexeril side effects

  84. Pingback: ezetimibe type of drug

  85. Pingback: augmentin in pregnancy

  86. Pingback: how long does diltiazem stay in your system

  87. Pingback: depakote 125mg

  88. Pingback: best time to take evening dose of contrave

  89. Pingback: how to avoid weight gain on amitriptyline

  90. Pingback: aspirin chemical formula

  91. Pingback: what happens if i stop taking allopurinol

  92. Pingback: aripiprazole contraindications

  93. Pingback: celecoxib nursing implications

  94. Pingback: celebrex vs aleve

  95. Pingback: buspar anxiety

  96. Pingback: ashwagandha adrenal fatigue

  97. Pingback: will baclofen show up on a drug test

Leave a Reply