The top 10 mistakes refinancers make:
- Automatically refinancing with your current lender without shopping around
- Assuming lower rates will automatically save you money without considering overall cost versus savings
- Procrastinating over applying for a home loan while waiting for interest rates to drop. Don’t gamble on better future rates
- Failing to get your new rate locked in writing
- Not doing your sums. Decreasing your interest rate by at least 0.75% to 1% will save you about $100 a month on a $150,000 mortgage.
- Switching loans or lenders without clarifying whether the total costs (including establishment fees, legal fees, stamp duty fees, ongoing fees) are outweighed by the savings in interest
- Not having a lender or broker evaluate your credit rating and regularly revise your financial position
- Not knowing the true cost of refinancing. Make sure your lender provides you with written statements on application fees, deferred establishment fees, or break costs on fixed loans.
- Falling prey to the lure of honeymoon rates, which ultimately revert back to their original or higher rates at the end of the introductory period
- Taking out money to pay off credit cards with no intention of changing spending behavior, racking up further debts while drawing out more home equity. Don’t turn what could be a short-term debt into a long-term debt.
Source : Your Investment Property Editor (17 April 2012)