According to a report by the Mortgage Bankers Association, last week saw refinances jump 11% from the previous week. As more homeowners race to lock in low interest rates before they start to rise again, many borrowers are taking the first option they see. However, even though rates are low across the board, many homeowners are missing out on better deals by not shopping around for their new mortgage. Here are a few things consumers should do before they decide on a lender for their refinance.
- Rates often change, so borrowers need to know what the current average interest rate is. This will help them determine if a lender is trying to make a little extra money by offering a rate that's higher than the average.
- Borrowers should not expect to always get the average interest rate, especially if they have found a national rate. They should check with several local lenders to get an idea of what the rate is for their neighborhood or state.
- Remember that everything balances out in the end. If you are not paying anything down or have a "no-cost" refinance, you are probably paying a higher interest rate than you would if you paid the closing or made a down payment. Lenders find a way to cover all their costs and make a profit somehow.