Mistake 1: Only Shopping One Lender
The Consumer Financial Protection Bureau found that homeowners who shop 3 lenders save on average $1,500 over the first five years. Lender rates on the same day for the same borrower vary by as much as 0.5%. On a $400,000 loan, that difference is $133/month or $47,880 over 30 years.
Shopping 5 lenders vs. 1 saves an average of $3,000+ over the first 5 years per CFPB research. Getting additional quotes takes 30 minutes per lender. The ROI is thousands per hour of effort — few financial activities return more per minute.
Mistake 2: Focusing Only on the Rate, Not the APR
A lender offering 6.1% with $8,000 in fees may be more expensive than one offering 6.25% with $4,000 in fees, depending on your timeline. APR incorporates fees and provides the true cost comparison. Always compare APR, not just rate.
Mistake 3: Resetting to 30 Years When You Have Under 15 Left
If you have 14 years remaining and refinance to a new 30-year, you’ve added 16 years of payments. Even at a lower rate, the total interest paid over the new 30-year typically exceeds what you would have paid finishing the current loan. The calculator will show this — always run total interest paid, not just monthly savings.
Mistake 4: Rolling Closing Costs Into the Loan Without Calculating the True Cost
Rolling $10,000 in closing costs into your $320,000 balance creates a $330,000 loan. At 6.3% over 30 years, that extra $10,000 costs $12,700 in interest — you pay $22,700 for $10,000 in 'free' closing costs.
Mistake 5: Refinancing Too Close to Selling
If you plan to sell in 18 months and the break-even is 36 months, refinancing costs you money. Calculate your specific break-even before committing.
Mistake 6: Not Locking the Rate
Mortgage rates fluctuate daily. Not locking your rate at the agreed-upon quote exposes you to rate increases during the 30–60 day processing period. Always lock when you have a rate you’re comfortable with. Rate lock extensions are available if the process takes longer than expected.
Mistake 7: Ignoring Break-Even When Taking Cash Out
Cash-out refinances change the break-even math. The new loan is larger (original balance + cash taken), so payments may be higher even at a lower rate. Calculate the true break-even on the full new balance, not just the rate comparison on the original balance.
Run Your Numbers Before Making Any of These Mistakes
The calculator catches all seven. Use it before you sign anything.