1. Refinancing without shopping around
Even if you do decide to refinance with your current lender, you'll need to re-qualify for the new loan. This means your current financial situation will have to be verified by the lender.
2. Unaware of the Break-Even period
You need to calculate the break-even period, so that you can occupy the property until then and recoup your costs. This is helpful when you refinance with a similar loan in order to take advantage of a lower interest rate and monthly payments.
3. Not receive a Good Faith Estimate
4. Considering Assessed Value of property
5. Paying for an appraisal even if home value is low
If you think the appraised value of your home is low enough to get a good refinance loan, then you should ask your current lender to determine your home value using the automated valuation model (AVM). This approach takes into account the value of similar homes in the neighborhood.
The appraiser gives you a range of possible home values, which will allow you to determine whether you can afford the home with the financing that is available. You can even check out the home affordability calculator to know how much mortgage you will be able to afford: http://www.mortgagefit.com/calculators/howmuch-afford.html .
6. Signing loan docs without proper review
7. Not providing relevant docs in time
8. Getting a verbal Rate lock
9. Taking cash from a HELOC (Home Equity Line of Credit)
Moreover, if you withdraw money from your HELOC for anything except home repairs and then refinance, lenders will consider the first transaction as a "cash-out". This is because you've already accessed your line of credit. So, it's a good move not to pull out equity prior to a refinance.
- When to refinance a mortgage along with Heloc
- Should I need a title insurance at the time of refinance?
- Is it possible to refinance after bankruptcy?
- Should I refinance my house to consolidate debts?
- Can I refinance my home which is filed for Federal tax lien?
- Should I refinance my house or pay more towards the principal?
- Is the cash from refinance taxable?
- How many times can you refinance a mortgage?
- Should I refinance my house to add my wife to mortgage?
- Is it possible to combine ARMs and then refinance?
- Home Affordable Refinance - What is it all about?
- What is conventional streamline refinance?