Refinancing your loan can be one of the best financial decisions you make for your family. If you are able to save money every month or finance improvements you want to make on your home at a low-interest rate, it can be a sound financial decision. That being said, there are many mistakes you can make when you look for a home loan refinance lender. Before you jump at the first offer given to you, consider these mistakes that you should avoid.
Not Shopping Around
When you first hear those words “you are approved” you can feel like jumping up and down like a little kid. You can have a mortgage that is less expensive than the one you have now! That is exciting news! But what if the program, rates, and costs offered are much higher than what the lender down the street would offer you? If you do not shop around you would never know! This is why this is the largest mistake you can make!
Your credit is only hit for one inquiry when you have multiple inquiries in the same industry within a short period of time so you don’t have to worry about your credit score. You do have to worry about your finances and how much money you waste, though! Shopping around helps you see what costs are normal and which are a bit inflated for one reason or another. When you compare the programs, rates, and costs, you can make the right choice for you.
Not Asking about the Experience in a Specific Program
Just because a lender offers mortgage programs, does not mean he is experienced in each type. If you wish to use government-backed financing, for example, you want a lender that has extensive experience in the program you plan to use. Let’s say you want to remodel your house and will use the FHA 203K program to do so. Just because the lender down the street has FHA approval to offer the 203K loans does not mean he has the experience that is necessary to make it a successful transaction. Ask the lender about their experience in the program you wish to use in order to save many headaches down the road.
Not Asking about the Available Mortgage Options
You should always know all of the options that are available to you when you shop for a home loan refinance lender. Just because you have an FHA loan now does not mean you have to refinance into another FHA loan if you do not want to. Or if you want to refinance into another FHA loan, you might be eligible for the FHA Streamline Refinance, which makes refinancing very simplified and inexpensive. If you do not ask questions about what programs are available to you, though, you will never know your options. Typically, lenders do not offer more than one or two options, but if you ask, they have to tell you what you are eligible to receive. This could help you make the best financial decision for your situation.
Not Reading Reviews of a Home Loan Refinance Lender
The internet provides you with a wealth of information when it comes to looking for a home loan refinance lender. This includes reviews from previous customers. What better way to find out what a lender has to offer and how well he is likely to work with you than by hearing from others that already used them? Use the internet for what it is worth and see what others have to say. You can check sites like Yelp and Facebook to get a general idea of what people think of the lender. If you notice a lot of negative reviews, you know which lender to stay away from.
When you look for a home loan refinance lender, you want someone reputable and willing to work with you as well as someone that is affordable and fair. There are lenders like that out there, but you have to find the one that is right for you. Everyone has something different they look for in a lender, but if you shop around and see what each lender has to offer in terms of customer service, interest rates, and available programs, you will be able to secure the lender that is right for you.
Justin McHood is America's Mortgage Commentator and has been providing expert mortgage analysis for over 10 years.