Mortgage Refinance Information: 3 Tips to Help You Save

If you are in the process of refinancing your mortgage, you want to avoid overpaying for your new mortgage. Mortgage companies and brokers have clever ways of disguising junk fees and inflating the interest rate you receive. Here are several tips to help you avoid overpaying when refinancing your mortgage.

Mortgage Refinance Information - Shop for the Best Lender

Comparison shopping and doing your homework is the best way to ensure that you don't pay too much when mortgage refinancing. When you compare loan offers the best way to make a line-by-line comparison is to use the Good Faith Estimate. Mortgage lenders are required to provide the Good Faith Estimate upon receiving your application; however, most mortgage lenders will give you this document simply by asking for it. When you compare mortgage offers using the Good Faith Estimate it is important that you look at all aspects of the mortgage loans. Many homeowners think choosing the loan with the lowest interest rate means they will get the best deal. These homeowners frequently overpay with lender fees and closing costs.

Mortgage Refinance Information - Watch out for Retail Markup

The interest rate you qualify is an important aspect of the mortgage. Mortgage companies and brokers routinely mark up interest rates to boost their profits. Because you are already paying origination fees for the loan, it is possible to avoid paying retail markup and get a better mortgage interest rate. The markup mortgage companies add to your mortgage interest rate is called Yield Spread Premium. Just like knowing the blue book price of an automobile gives you an advantage when negotiating for price, knowing the wholesale interest rate you qualified will help you avoid paying retail markup of your mortgage interest rate.

Mortgage Refinance Information - Choose the Right Mortgage Type

When it comes to refinancing your mortgage loan, you have three choices for the type of loan you choose. You can choose mortgage refinancing with a fixed interest rate, an adjustable interest rate, or a hybrid loan with both types. The type of mortgage you choose depends on your financial needs for the loan and how much risk you can tolerate with your finances. Fixed interest rates offer the highest degree of security and have the advantage of predictable payments you can plan your budget around. Adjustable Rate Mortgages come with lower rates; however, there is much more risk and you need to understand what you are getting into. Hybrid loans offer both types of interest rates, there is a period of fixed interest payments before the loan is converted to an adjustable interest rate.

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