If your new mortgage rate seems too good to be true then it probably is. Check for hidden fees in your mortgage that will make up that suspicious difference.
Make sure that your original mortgage does not have a pre-payment penalty or early payoff penalty of any kind. Sometimes people will get into their mortgage with the mortgage having a pre-payment penalty and they will not even know about it. Pre-payment penalties usually range from 6 months to 3 years with a penalty for an early payoff. The penalty is usually about the amount of 6 months worth of your mortgage loan interest, but this varies. You would have to be able to have some significant payment and interest savings on your refinance loan to justify refinancing a mortgage loan with a pre-payment penalty.
There are literally thousands of mortgage companies all over the country. It is important that you choose a reputable one. Most reputable companies will be part of the Better Business Bureau or other community watchdog group. Good companies will also have websites that rank well on search engines such as Yahoo and Google.
If you plan on moving out of your existing home within the next few years, it may not be beneficial for you to refinance. Make sure you let your mortgage specialist know your future plans.
If you are refinancing from one ARM to another, check the initial rate and the fully-indexed rate. Also ask about the rate adjustments you might face over the term of the loan.
