Common Dangers of Refinancing Your Mortgage
The main danger of mortgage refinancing comes from a lack of awareness. If your not aware of what you want from refinancing, and the pros and cons of a recommended deal, then you are open to being taken advantage of by unethical mortgage brokers.
Does this mean you shouldn't use mortgage brokers? No, there are bad eggs in every industry. It just means you should make sure your are aware of the pros and cons of the deal you are being recommended. Mortgage refinancing is not for the uninformed. You need to pick your broker carefully.
You see to find the best mortgage refinancing deal you need to compare the pros and cons of a lot of different options, loans and lenders. To do this yourself would be overwhelming and very time consuming.
Your bank won't do it for you, as they will defiantly be biased and recommend their loan products. That's why it's good that we have mortgage brokers to do this for us. It's there full time job to do this well.
However, as I mentioned earlier their are bad eggs and bad practices. One such bad practice is called churning. Churning is where mortgage brokers refinance a loan even though the benefits do not outweigh the drawbacks for the borrower. They do this with total disregard too the borrower, just so they can get extra commissions.
Awareness is the key here. Just be aware about the pros and cons of a recommended deal. Also be aware of how these bad mortgage brokers operate. Read the following section, How Pick the Best Mortgage Broker, to have a good guideline to picking your mortgage broker. With the right guidelines and the right information this is an easy process.