Mortgage Refinance - Mortgage Refinancing - Home Mortgage Loans – Low Mortgage Rates – Mortgage Loans - Refinance Mortgage

by  Joel McDonald

Although lowering your monthly mortgage payment is always
attractive, don't let a slightly lower mortgage rate fool you.
If you're not careful when thinking about a mortgage refinance,
you could cost yourself more in expenses than what you save in
monthly payments -- and not even know it. (Even with so-called
"no cost" mortgage loans.) Refinancing a home loan has more to
it than appears on the surface. Be sure to consult with a
mortgage professional before getting yourself into something you
can't reverse.

Mistake #1: Waiting for lower interest rates.

Mortgage rates are notoriously unpredictable. No one can
speculate on mortgage rates with enough accuracy to win every
time. If rates are attractive, consider refinancing. If you do
it right, and rates go down again later, you can always
refinance again. If rates go down substantially before you
finalize the loan, you can always change mortgage brokers. If
rates go up, you'll be glad you locked that initial rate in!

Mistake #2: Not shopping around enough with local mortgage
bankers/brokers.

E-loan, Lending Tree, and other online mortgage shopping sites
are great, but be careful! They are national mortgage shopping
sites. That might sound nice because you get mortgage lenders
from across the nation competing for your business, but be
careful - any lender other than a mortgage lender who is
familiar with lending in your home-state will not be familiar
with local practices, and that could cost you in many ways. It
might not only cost you that lower interest rate, but depending
on your other circumstances, it could actually cause you miss
that window of opportunity.

Mistake #3: Not looking at the whole picture.

If you have been paying your mortgage for several years, the
amount saved every month by refinancing might not save as much
as you think. In fact, it usually costs far more than people
think! In other words, if you are 10 years into your mortgage
loan, refinancing your mortgage would make you start over on the
repayment of that debt. Obviously, it might be great to save
some money after refinancing your home loan, but once you
refinance the loan you've been paying on for 10 years, you'll be
paying off that loan for an additional 10 years! That could
really hurt. Sure, it may seem great that you're lowering your
$1200 monthly payment by $100, but when you factor in the extra
120 payments of $1100 that you'll have after refinancing, you'll
find that your "$100 monthly savings" will actually cost an
extra $108,000 over the life of the loan! ($1100 times 360
payments over 30 years is $108,000 more than $1200 times 240
months.)

Be sure to get a "good faith estimate" and "Truth in Lending
statement" from your mortgage broker before jumping into a new
loan that could cost thousands of dollars (if not hundreds of
thousands) over the life of your new loan. Get your mortgage
broker to explain not only what your monthly payment will be,
but also what your new loan balance will be compared to your old
loan, what the new interest rate is, and how many years you will
be adding to your repayment schedule if you do refinance.

About the author:
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Mortgage Refinance - Mortgage Refinancing - Home Mortgage Loans – Low Mortgage Rates – Mortgage Loans - Refinance Mortgage