Three refinancing mistakes that you should try your best to avoid.

Today I want to talk about the three biggest mistakes to avoid when you refinance. Everybody is talking about rates right now; they’re all over the place. That’s why I wanted to talk about what you should avoid if you plan on refinancing:

Mistake No. 1: Not optimizing your credit score. Most refinances are credit-driven, so optimize your credit any way you can. If you have a little bit of cash, pay down some of your cards to increase your FICO score and get a better rate. It’s really easy to do.

“The money is yours, but you’ll be paying the debt for a long time.”

Mistake No. 2: Using equity for the wrong reasons. I see people do this all the time. They come to me and ask to refinance so they can go to Hawaii and buy a Mercedes. The money is yours to do with what you want, but be aware that you will be paying that debt for a long time to come. I advise you to use that equity to pay off high-interest debt, like credit cards. Whatever you do with your equity, be careful and smart.

Mistake No. 3: Refinancing too often. Most of the time, this isn’t the borrower’s fault. It happens because they don’t have someone advising them correctly. Don’t plan on refinancing again two years later because you don’t know what interest rates will be like then. Remember that every time you refinance, you have to pay fees. If you refinance too often, you’re just adding to the cost. Really, everything you can do with a refinance can be done at the same time—you can switch from FHA to conventional and get equity out with a single refinance.

Make sure you think about why you want to refinance before you do. If you want help or advice, I’d be happy to strategize with you. Just give me a call at 619-948-2996 or email me. I look forward to talking with you soon.