While “extra low rates” sounds great at first, the choice to refinance your home at these “extra low rates” might not end up being so great. Look for these red flags to determine whether you should take the deal or pass.
- Know what the average national home loan interest rate is when you go to ask for a loan. If your lender asks you to pay more (a quarter to a half percent) than the average interest rate, then you will probably be paying more than what your prospective home is actually worth.
- Also, if your lender asks you to pay property mortgage insurance and you agree, you have just added thousands of dollars to your loan.
- If you are still fairly mobile, or you think you may have to move (for work, school, etc.) within the next couple of years, opt out. If you are in your home for less than two years, you could lose money by opting for “extra low rates”.
- Lower rates mean longer contracts. So, while you may be paying less per pay period, it will take much longer to pay off your loan, and you will end up spending more money because of the amount of interest you will be paying.
For more information on refinancing at extra low rates, check out this article by RisMedia.