Why is a mortgage refinance in Sierra Vista, AZ one of the preferred choices of many homeowners? Because it can lead to big savings — if you do it right.

If you are considering mortgage refinancing, watch out for these common pitfalls:

Not shopping around for rates

The truth is, even a quarter-point drop in interest rate could translate to huge savings after the life of the loan, and by “huge savings,” we mean several thousand dollars. Therefore, do not just accept the first refinance offer you receive. Remember that interest rates vary widely between and among lenders. As a good rule of thumb, shop around to find at least three sources such as a local bank, credit unions, and online lenders to find great deals.

Not scrutinizing closing costs

As with conventional home loans, applying for a mortgage refinance in Sierra Vista, AZ also means paying for closing costs, which can be between 2% and 5% of your loan amount – a substantial amount of money. It is an intelligent decision not to ignore these costs as this may wipe out the savings you expect from refinancing. Remember, always ask for a loan estimate to see a clear breakdown of the fees.

Extending your loan term unnecessarily

Remember the very purpose you refinance your mortgage. When the new interest rate is more favorable than your current mortgage, you refinance either to shorten the life of your loan term, save a significant amount, or access the equity of your home. If you intend to extend your loan term, ensure you carefully weigh things and that you are not doing when not necessary. Remember, refinancing into a new 30-year mortgage can lower your monthly payment– but it may increase the total interest paid over time. If you’ve already paid off several years, consider a 15- or 20-year option to avoid starting over.