Top 5 Mistakes to Avoid When Refinancing Your Home Loan

Refinancing a mortgage can be a smart financial move if done right. In fact, Americans who refinanced saved an average of $2,800 per year. However, many homeowners miss out on those savings by making avoidable mistakes when refinancing home loans.

From hidden fees to poor timing, one wrong step can turn potential gains into long-term regret. If you’re planning to refinance your home loan, this guide breaks down the most common—and costly—mistakes when refinancing your home loan to steer clear of. Let’s find out.

1. Not Comparing Offers from Multiple Lenders

Too many borrowers stick with their original lender or grab the first quote they receive. This can cost you thousands. Lenders offer different rates, terms, and closing costs—even for the same borrower profile.

Tip: Always get at least 3 loan estimates from different lenders. Review the Annual Percentage Rate (APR), not just the interest rate, because it includes fees. Pay attention to loan origination charges, appraisal costs, and third-party fees.

2. Refinancing Too Often—or Too Soon

Refinancing too frequently can hurt your credit score and erode savings through repeated closing costs. On the other hand, refinancing too early into your home loan term might mean you’re restarting your amortization schedule without real benefit.

Tip: Know your break-even point—the time it will take for your monthly savings to cover your refinancing costs. If you plan to move or sell before that point, it’s not worth it.

3. Ignoring the True Cost of Refinancing

One of the biggest mistakes when refinancing your home loan is focusing solely on monthly savings and ignoring total costs. Some lenders advertise “no-cost” refinancing, but the costs are typically rolled into the loan or paid through higher rates.

Tip: Ask for a Loan Estimate and calculate your total closing costs. Include:

• Appraisal fees
• Title insurance
• Credit report fees
• Underwriting and processing fees

Make sure the savings outweigh these costs over the life of the loan.

4. Not Locking In Your Interest Rate

Interest rates can change daily. If you don’t lock in your rate with your lender, you could end up with a higher rate by the time you close.

Tip: Request a rate lock when you submit your home loan application, especially if rates are trending upward. Confirm how long the lock lasts (typically 30 to 60 days) and if there’s a fee for extensions.

5. Extending the Loan Term Without Realizing It

Many homeowners refinance into a new 30-year loan without considering the long-term implications. This might lower your monthly payment, but you’ll pay significantly more in interest over time—especially if you’ve already been paying your original mortgage for several years.

Tip: If you’ve already paid 10 years into your home loan, consider refinancing into a 15- or 20-year loan instead of resetting the full term. You’ll keep building equity faster and reduce interest costs.

Refinance Your Home Loan Via Choice Mortgage Group

Do you want to refinance your home loan or buy a new property? Choice Mortgage Group makes the complicated simple. Their team uses everyday language to walk you through the entire process with care and clarity.

Their refinance home loan advisors treat every client like family and work hard to make your experience smooth, honest, and stress-free. Let them help you make the right move with confidence. Apply today and see the Choice difference for yourself.