Refinancing mortgage: In order to make sure you optimize the benefits of refinancing your home loan, there are simple steps you can take to ensure you are in the best position to move forward. With just a little homework you can avoid potential perils and pitfalls.
Total Cost to You
Recently, numerous websites have emerged claiming they can offer you the best deals on home loan refinancing loans. Unfortunately, many of the companies behind these websites charge excessive interest rates and additional fees. By comparing the amount financed, the finance charges, and the total payments between various providers you can effectively weed out those with excessive fees and other hidden costs. Shop around using the convenient online forms and accept the provider with the lowest interest rate and fewest additional charges.
Poor Customer Service
In addition to hidden fees and charges, some companies are lacking in the area of customer service leaving new customers at a loss when questions emerge. Although enough complaints will eventually force many of these companies to shut down, it pays to due a little research on the company you are considering. Check the Better Business Bureau in your area as well as testimonies available online to ensure the company you are considering has a good reputation.
Judging a Provider Website
Before you fill out on online application to refinance a loan, take a look at the information available on the website. Does the site answer questions you might have and is it easy to navigate? Are there adequate resources for additional information both within the website in recommended links? Is the application short and easy to understand? Are additional fees and obligations appropriately disclosed? Is bad credit a problem? Use your instincts – if something seems off – it probably is.
In an attempt to limit potential legal fees, some companies require disputes to be settled using the arbitration system which allows issues to be settled outside of the U.S. legal system. Avoid signing a loan contract that requires you to agree to arbitration. The lender often hand selects the arbitration organization, possibly stacking the cards against you. By agreeing to mandatory arbitration many of your legal rights are forfeited and you may even be required to appear in person in the office of lender – regardless of the inconvenience and cost to you.
Check your loan contract to see if it requires you to pay a penalty if you refinance or sell your home before a particular date. Although prepayment penalties decline over time, in the event you decide to pay off the loan early, you may incur an additional penalty fee. Penalties are often either a percentage of the outstanding balance at the time of prepayment or a specified amount of interest based on your monthly rate. Mortgage lenders can charge up to six months of interest on 85% of the original loan balance, resulting in substantial cost to you. Especially if you have good credit, you can easily avoid loans with a prepayment penalty.
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