If you are in the process of mortgage refinancing, comparison shopping for the best loan will save you thousands of dollars. Homeowners that compare loan offers from a variety of mortgage lenders avoid many costly mortgage mistakes; however, making sense of loan offers can be a difficult task. Here are several tips to help you comparison shop for the most competitive offer when refinancing your mortgage loan.

Mortgage Refinancing Information

When comparison shopping for a new mortgage loan it is important to compare all aspects of the mortgage offers you consider. Assuming that choosing the mortgage with the lowest interest will save you money is one of the biggest mistakes you can make. You need to compare interest rates, fees, points, and closing costs in order to find the most competitive offer. Just because a mortgage company offers a low interest rate doesn’t mean they aren’t overcharging you in other areas.

The Internet is an excellent tool for mortgage comparison shopping. The majority of mortgage companies post mortgage interest rates and the Annual Percentage Rates on their websites. The Annual Percentage Rate or (APR) is a good starting point for comparing loan offers; however, you need more information to make an informed decision as to which mortgage is best. Pay close attention to the number of points each lender requires. One point is 1% of the loan amount and you will be required to pay this fee in order to qualify for the loan. Not all mortgage lenders require points; if a lender does not require points you can often negotiate for lower interest rates and better terms by agreeing to pay this fee.

Keep in mind that you will be required to pay fees and closing costs when refinancing. The benefit you gain by refinancing your mortgage needs to be weighed against the fees you pay to determine how long it will take you to recoup your expenses. If you only plan on staying in your home for a few years you might not recoup the refinancing expenses. Generally, the longer you plan on staying in your home, the more sense it makes to refinance your mortgage loan. When you compare loan offers pay close attention to any penalties included with the mortgage. Many lenders include prepayment penalties to discourage you from refinancing or selling your home. Never accept a mortgage offer with this penalty if you can avoid it.

Remember the loan with the lowest interest rate isn’t necessarily the best deal. Use the Good Faith Estimate to compare loan offers line-by-line to determine which mortgage has the lowest fees and closing costs. Many of these fees and closing costs are subject to negotiation with the lender; if you have excellent credit you can often negotiate for more competitive fees and costs as a condition of getting your business. To learn more about comparison shopping for the best mortgage offer while avoiding costly mistakes, register for a free mortgage guidebook.