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Avoid mortgages with a prepayment penalty. Often in the small print, a pre-payment penalty can cost you thousands of dollars. It is meant to discourage you from refinancing your mortgage.

Make sure you ask your loan broker how many discount points you will have to pay. Also, make sure you find out what the origination points are too. Points are often used to disguise the real rates you will be paying. If you take out a loan at 5%, but also have to pay 3 points (3 percent of the loan at closing), is that really a 5% interest rate? No. It is not. That is why it is important to take your Good Faith Estimate to your financial advisor. Points are points, whatever they are called. It is money out of your pocket.

Refinancing your current mortgage has many advantages. First, you may be able to lower your monthly payments. Second, you may be able to take cash out to pay off your high interest credit card bills or buy a new addition. Third, you may be able to get a lower interest rate or shorter term with a new loan. You may also be able to stop paying PMI if your home has recently appreciated in value. You should speak with a qualified financial advisor to see if refinancing is a good option for you.

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