Home mortgage refinancing can be a terrific idea in many cases, often with money saving benefits, but there are some things that you should watch for and be careful of. This is true whether you are refinancing a mortgage in Canada, the USA, or somewhere else in the world. Paying attention and knowing what to look out for can help you get a home mortgage refinancing loan that works for you instead of against you.
Pre-Payments Penalties Are Undesirable
If you are like most people then you believe that paying off a debt early is a positive thing, but with mortgage refinancing loans this may not always be the case. If you have a mortgage refinancing loan and you pay it off ahead of time some lenders will charge you a financial penalty for this action.
Respectable and reputable lenders do not usually include these penalties, so be leery of any contract which contains a pre-payment penalty clause. Some shady lenders may charge a penalty of the equivalent of six months worth of interest payments for paying off your mortgage refinancing loan, or a specific percentage of the loan balance at payoff.
Arbitration Is Not The Best Option For Home Mortgage Refinancing Disputes
You should look for any arbitration clause in your home mortgage refinancing contract, and avoid any lenders who include this clause. Arbitration means having any disputes settled by a third party, rather than a court. As a homeowner, you have rights and protections that the law provides, but if you agree to arbitration you are waiving many of these rights.
Comparison Shop For The Best Interest Rate And Terms With Your Mortgage Refinancing Loan
Not looking around for the best possible mortgage refinancing deal is a big mistake, one that is far too common. When you compare the different offers available you will get an idea of which lenders are being fair, and which are out for every penny that can be squeezed from the deal.
Some lenders will charge much more than others for the same loan amount and circumstances. Compare different offers to see which ones will benefit you the most, and eliminate any that charge exorbitant interest rates or act shady in any way.
Look For Extra Charges And Hidden Fees On The Mortgage Refinancing Contract Good Faith Statement
A common practice with unsavory mortgage refinancing lenders, both in Canada and other countries, is to add on additional fees and charges to bump up the profit made from the contract. These costs may be labeled as administrative fees, courier or delivery costs, application fees, and others.
Some lenders will add fees to the loan costs and these will be listed on the Good Faith Statement. Always read this document, and all others as well, very carefully and completely before you sign it. If you see additional fees on the statement then do not sign until the document has been corrected, and the extra charges have been eliminated in writing.