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1.-Many homeowners do not fully understand the ramifications of and Adjustable Rate Mortgage. Too many borrowers apply for and obtain new mortgages that replace an existing fixed-rate loan with an ARM, yet they do completely comprehend the potential payment scenarios that exist within their new contract. Many borrowers are enticed to refinance by the promise of lower monthly payments, but they fail to look at the long-term financial changes that could occur in their payments, which could potentially negate the perceived benefits of the refinance.
2.-Many homeowners do not take the time to research all of their options when searching for a new mortgage. Often times there are multiple loan contracts that present different scenarios that could benefit the borrower, but without a comprehensive comparative analysis there is the possibility that the new mortgage was not the best choice in the long run for the homeowner.
3.-Too many homeowners go into a refinance situation without fully comprehending the additional costs associated with a new loan. They are then unpleasantly surprised to learn that there are significant out-of-pocket expenses or additional fees that are added to the new loan. It is essential that the borrower calculate these additional costs and ensure that the added expenses are legitimate and still make the refinance a good decision.
4.-Many homeowners refinance their existing mortgages for poor reasons. A significant number of lenders will offer the option for borrowers to refinance with additional cash taken from the equity of the property. When the cash out is the primary reason for the refinance in the first place, it is absolutely imperative that the homeowner consider the intended uses for the equity proceeds and determine whether or not it makes sense in the end to utilize equity.
5.-Many homeowners are under the misconception that they will obtain the best refinance deal by going through their existing mortgage lender. This is not always the case. Just because the lender already has the borrower’s information, there is no guarantee that this particular lender has the best available loan programs, nor is it a guarantee that the borrower will be required to undergo a less strenuous application process. With the number of lenders available, it always makes sense for the borrower to research multiple companies before choosing which one to proceed with.
Recommended Mortgage Refi Lenders - We maintain a list of recommended mortgage companies online and update the list regularly.
Things to Know Before Getting a Mortgage Refinance Loan- Here is a list of 50 things you should know before refinancing your mortgage.