The top five mistakes consumers make when refinancing their home loan were revealed by LendingTree Network’s newly released “Monthly Lender Marketplace Survey”. According to the survey, the top 5 mistakes made by consumers refinancing their home loans are:
- Over-estimating the value of the home: With home values dropping in today’s market, borrowers typically over-value their home, causing borrowers to receive higher-than-expected loan offers.
- Hesitating to lock in low rates: Lenders are seeing borrowers waiting for rates to drop further, missing out on the opportunity to lock-in with the current low rates.
- Focusing only on interest rates: Borrowers are focused only on rates when they should also factor in lender fees, loan terms and lender reputations into their ultimate decision.
- Overlooking shorter-term loans: Many borrowers are refinancing into a 30-year fixed mortgage instead of considering other options such as a 20-year or 15-year fixed rate, which would shorten the life of the loan and significantly reduce the amount paid to interest.
- Consumers are uncertain of what documents are required to refinance: Borrowers who haven’t refinanced in recent years sometimes fail to have the required document going into refinancing which delays the closing process.
The best way to avoid these mistakes is to educate yourself on the refinancing process and, most importantly, select a competent and qualified lender. Don’t fall for misleading “teaser” ads or select a lender simply on the basis he or she is a friend or a neighbor. Do your homework. As a result of recent changes, all mortgage loan officers have to be licensed, which has helped weed out some of the people that were less knowledgeable or not committed to the profession. The Mortgage Bankers Association as well as the Association of Mortgage Professionals both have websites with good information for consumers so you may want to check those out.
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