Investment in Real Estate can be a long term beneficial step for you and your family. In any emergency situation or in the case of other requirements like starting a business, the mortgage on the property can really become a big financial support. When you are already under the mortgage and need more money, refinance options are available with a lot of financial institutes. There are few points that you should keep in mind to avoid any mistakes that may cost you extra during refinance or even cause hurdles in the process. There are a few common mistakes that need to be avoided at any cost. The following list will help you keep a check on yourself to keep your future safe:
Keep your credit score optimized
Any person’s credit history is the main criteria duringMake sure that you keep your credit score in the best possible range. During a recent study done by Federal Trade Commission, 20 percent of the credit information in the records is false or outdated. Such information may cause higher refinancing rate that will result in a bigger hole in your pocket. In general one-point change in the credit score may increase your mortgage fees by 1 percent. That means just a mere difference of a credit score say 685 and 686 will cost you an extra $1000 on every $100,000 financed. So before you start the process to get refinanced, make sure you check and recheck your credit score information properly.
Check information and rates of different lenders
It is a common practice among most of the house owners to just ask for a quote from a single lender. They do not even bother to check the rates and offers from any other lender. You can easily find one or more lenders that may offer you 0.50% to 1% lesser rate of interest from your present lender. That means you will save more than $14,000 over a mortgage of $300,000 over a period of 10 years. Thus, always make sure to check the rates of at least 3-4 lenders before finalizing.
Do not refinance too often
This is one of the most common mistakes that people do. Make sure to put a gap between two mortgages and pay the dues on time. Try not to miss any installment during this period. The refinancing done on frequent intervals increase the mortgage period extensively. Make sure to follow the FHA (Federal Housing Administration) guidelines while getting the refinance. When you refinance the loan after 5 or 10 years, it resets the mortgage period to 30 years. If you keep on repeating it too often, it will not only increase the rate of interest but will also put you in a vicious loan cycle.
Keep yourself updated with the property value
The price of real estate changes very frequently. A minor change in the market can cause rise or fall of the prices in a very short period of time. When you are trying to get a refinance, make sure to get the evaluation of your property done according to the current price.for the homeowners often help in planning the refinancing. This will help you in getting the right amount of refinancing at the best possible rates.