One of the biggest mistakes any homeowner can make when contemplating a refinancing is solely basing their decision on current interest rates. Of course, getting a lower rate can indeed save you large amounts of money over the life of the loan not to mention an immediate savings if it lowers your monthly payment.
A low rate can be great news. But beware. There are always a few lenders who may use this as a marketing ploy to get you to apply only to lead to abnormally high closing fees. On the other hand, don't expect a lender to do your loan for free. In most instances, you will have to pay closing costs or points.
But don't forget, you can use points to your financial advantage. Educated consumers know that paying a point or two up front will give them a much lower rate thus saving them tremendous amounts of money over a 15 to 30-year mortgage term. Plus, a lower monthly payment can give you the needed breathing room to avoid a possible financial disaster.
2. Always Review the Good Faith Estimate
Another huge mistake homeowners make when refinancing is not reviewing the Good Faith Estimate. This document is a methodical breakdown of the total cost of the mortgage, including the A.P.R., the interest rate (yes, these are 2 totally different financial figures) and all fees.
But remember, this document is exactly what it is called, an "estimate." The actual figures for your loan might be slightly different at closing. This might happen due to your credit rating being lower than you anticipated. Or maybe your appraisal or debt-to-income ratio is not what was originally expected.
Whatever the reason for these changes on the Good Faith Estimate (GFE), keep in mind that your loan officer had no control over these stipulations. You may have to live with them for now.WARNING: If you notice that the GFE numbers have changed dramatically than originally stated, that may be a red flag and something you need to discuss with your lender.
When it comes to St. Louis refinancing home loans, they should be drawn up to help you and your family accomplish your financial goals and not be an additional burden.
3. I'm Waiting for the Right Time to Refinance
It's human nature to watch interest rates on a daily basis especially when they are unusually low. The consumer may feel they will jump in at the right moment yielding them the lowest rate possible.
The best advice: Don't be greedy. By trying to time a mortgage interest rate to the tee is like picking the perfect stock. It's very difficult to do even for the career professional. People have entirely missed a good refinancing opportunity because of waiting too long to act.
If rates are historically 1 to 2 points lower than the norm, that may be the obvious and appropriate sign to move forward with a St. Louis refinancing home mortgage. So contact your local lender now at (314) 698-4092.
