If you are a homeowner in the process of refinancing your mortgage, proper comparison shopping can save you thousands of dollars. There are a number of common mistakes borrowers make when refinancing that cause them to overpay for the new mortgage. Here are several tips to help you avoid overpaying for you mortgage when comparison shopping for the best mortgage offer.
Careful comparison shopping when mortgage refinancing will save you money and many future headaches. Comparing loan offers from a variety of mortgage lenders allows you to choose the mortgage with the most competitive fees, interest rate, and closing costs. When you shop for mortgage offers it is important to request stated income, “no-obligation” quotes so the lenders do not access your credit reports until you are ready to submit the application.
Teaser rates are usually used to promote products that are better for the lender than they are for the homeowner; however, they can be useful in certain situations. If you need short-term financing while you sell your home, a teaser rate could save you money. Make sure the loan does not include a penalty for early repayment as this would eat up your savings with an unnecessary fee.
Teaser rates are different from the introductory interest rate you get with an Adjustable Rate Mortgage. These loans typically come with a lower introductory interest rate that often lasts as long as ten years. Introductory interest rates can be short-term as well, so it is important to read the fine print before choosing a mortgage with a teaser or introductory interest rate. If you fully understand what you’re getting into, an introductory rate could save you money with an Adjustable Rate Mortgage.
To fully understand what you’re getting into with any mortgage loan, carefully read the Good Faith Estimate to find out exactly what you’re paying for mortgage refinancing.