How to Avoid Mistakes When Refinancing Your Mortgage

A Home Buying Article Contributed by Elizabeth Fox-Wise

Overworked Lenders Making More Mistakes in Mortgage Refinancing

The past few years have been marked with record numbers of mortgage and mortgage refinancing applications. Record low interest rates have created a frenzy of eager borrowers looking to secure a mortgage to buy a new home or looking for refinancing of their existing mortgage at lower rates with better terms.

In their eagerness to meet the needs of the demanding market, mortgage lenders have met the 2000s head on. In 2002 mortgage lenders financed over two trillion dollars in home mortgages. It is estimated that sixty percent of those were mortgage refinancing.

Studies are finding that overworked mortgage lenders, coupled with over eager homeowners seeking mortgage refinancing, is creating a situation where a lot of errors are being made and going undetected.

Things the Homeowner Can Do to Oversee the Mortgage Refinancing Process

To help deal with the increased demand for mortgage loans, many lenders have brought in extra help. Studies have shown that in 2002 alone 44,000 jobs were created by the increase in the demand for home mortgages. Many of these new employees are unskilled and mistakes can be made anywhere in the mortgage refinancing process that can be quite costly to the borrower.

There are some things that you should be sure to review carefully when refinancing your mortgage.

As part of the mortgage refinancing process you will have to submit your credit report for review by the lender to show that you are not too high of a mortgage refinancing risk. Be sure to get a copy of your credit report in advance and review it for accuracy. If any mistakes are found, try to get them fixed before starting the mortgage refinancing process.

Be sure to review all fees charged by the mortgage lender for your refinancing. Compare them against the estimate that was provided to you before you applied. While the first was only an estimate and not all fees will be exact, they should be close to the actual amount charged. If they are not, you question the mortgage lender to find out why.

After the Mortgage Refinancing is Done, You Should Still Monitor the Mortgage

Many homeowners make the mistake of relying on what is printed on their monthly mortgage statement instead of monitoring their own home mortgage. Every time a mortgage statement comes in the mortgage holder should check that the money paid was applied appropriately since the last statement. Double check the math to make sure that all figures are correct, and no errors were made. It is easy to make an honest mistake in a way as simple as transposing a couple of numbers. If an error is found in the monthly mortgage statement it should be called it to the lender's attention immediately.

When monitoring a mortgage be sure to monitor the escrow account. The Escrow Account holds money paid by the borrower with the monthly mortgage payment, for the purpose of paying for a year's worth of property taxes. The mortgage holder should know when the property taxes are due and monitor the account to ensure that the mortgage lender doesn't collect too much or not enough money to cover tax payments.