Choosing the Best Refinancing Provider – Tip #2 Get the full picture of what you will be asked to pay
When considering your refinancing options it is very important not to just go with the first lender that crosses your path. You should, instead, do your best to compare and contrast the offerings of different companies in order to be able to make an informed decision. This is the second in a series of three posts designed to help you to do just that. Its focus is on determining exactly what refinancing with different providers will cost you.
The next step after doing ‘due diligence’ on different providers is to ask the companies that you are interested in to give you a full breakdown of all their costs and fees. Most companies will have no problem whatsoever with providing this. If, however, a company stalls and acts evasively this should of course set the alarm bells ringing right away!
Having a full list of fees and charges in front of you will help you to avoid the trap of not looking further than a relatively low interest rate. The fact is that high rates and charges can very easily wipe out savings generated by lower rates if you are not careful. You should therefore keep a make sure that, in addition to interest rates, you also compare all the different costs associated with setting up and servicing the new loan agreement.
Some of the costs that are very often ‘loaded’ in favour of the lender are document preparation fees, legal fees, survey fees, miscellaneous ‘closing costs’ etc.
Another cost, that may perhaps not be immediately relevant but that should certainly be researched, is the kind of early payment penalties that a company charges. It is sometimes part of the strategy of some companies to offer enticing initial packages as a prelude to using high early repayment penalties as a means of ‘locking in’ borrowers for a number of years.
In the end having a full picture of the short and long term financial implications of all possible deals will be your best protection against merely responding to the hype generated by an excellent marketing campaign. You should therefore make sure that you diligently ‘crunch the numbers’ before putting pen to paper.