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Mortgage Refinance Loans

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Refinance Rates

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Loan Rate APR
30 Year Fixed Rate 3.88% 3.38%
15 Year Fixed Rate 4.06% 3.61%
5/1 Adjustable Rate 2.75% 3.37%
* These rates are averages, and might not apply to you.

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There is a close link between your credit scores and the refinance mortgage rates you'll be able to secure. We have an extensive guide on fixing up your scores and so much more on our credit scores page!

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Refinance Loans

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Biggest Mortgage Refinance Mistakes Biggest Mortgage Refinance Mistakes and how to avoid them

Indeed, plenty can go wrong when refinancing a mortgage. It may start out to be a great idea and it might seem like a good deal, but unless you really compare apples to apples, and understand the total commitment, your great deal can turn into your worst nightmare. Knowing the pitfalls is half the battle of avoiding them. Once you are aware of the biggest mortgage refinance mistakes, you can then take steps to avoid them.

One of the biggest mortgage refinance mistakes is getting involved with unscrupulous brokers and lenders. Although upfront fees are illegal, many people still fall for this scam. Generally, it is because they need the mortgage refinance, and succumb to ignorance and inexperience, rather than listening to their own concerns. In addition, they may be so tightly in debt that they do not have the money to let a lawyer review the documents in order to avoid typical scams.

Another big mortgage refinance mistake is paying high closing costs. In order to refinance, you need to terminate your relationship with the existing lender and buy out that contract. Interest penalties, administrative costs, and any arrears will all need to be paid, and in many cases this could amount to thousands of dollars, money you may not have. So what most people do is mortgage that amount. Now you have lost even more equity in home. Consequently, you have not saved anything, but in many instances created a larger financial burden.

Additionally, there are many individuals who wait until the very last moment believing that an opportunity is going to come their way. For example, interest rates may be dropping and instead of capitalizing on the lower rate, they wait thinking that another decline is around the corner. But what ends up happening is they actually miss the opportunity since the lower rate never materializes.

Then there is the "cash out" trap. And this one is so prevalent right now because jobs are being lost by the hour. People are scared and they believe their only hope of providing for themselves and their families is by refinancing their mortgage. If they have equity in their homes, they can refinance for more than they owe if the home still has value above that amount. For example, let us say that a house is appraised at $200,000. The home owner owes $120,000 on the existing mortgage but decides to refinance at $160,000. They now have $40,000 cash in their hand, but they have increased the payments on their mortgage and lost $40k in equity. For some reasons, this is smart, but for many people, the money is lost, and there is not much to show for it, but a lifetime mortgage.

Lastly, a reduction in interest may seem appealing, and the free gifts or bonuses might sound like a good idea. But, many people find that after they pay out the original mortgage and move on to the refinance with a lower interest, the reduction may have been negligible and actually cost them money in the long run.

In order to avoid mortgage refinance mistakes, it really is prudent to research and take your time with the decision so that you can avoid costly mistakes.

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