This is a guest article from the great people at Mortgagefit.com.

If a considerable amount of your monthly income is going towards paying the interest on your mortgage, then you can consider refinancing your home loan, especially when youíre paying a comparatively high interest rate as compared to the current market rate. However, often borrowers make certain mistakes while taking out a refinance loan. You should avoid committing such costly mistakes in mortgage refinancing.

5 Mortgage Refinancing mistakes

Read on to know about 5 mortgage refinancing mistakes and how you can avoid them.

1. Focusing only on the rate of interest: Though interest rate is an important criterion in refinancing, yet it should not be the only one to choose a refinance loan. You should also consider closing costs, points, loan origination fees, etc. while refinancing your home loan.

2. Failing to lock-in the interest rate: Interest rates are unstable; therefore, you should always lock-in the rate as soon as you find a favorable one. This is because the rate of interest may increase by the time the loan gets processed.

3. Refinancing quite often: Mortgage refinancing helps you to take advantage of lower interest rates; however, you should not refinance too often. This is because every time you refinance, you need to pay high closing costs.

4. Opting for a longer loan term: You may end up paying more on your home loan even with a low rate of interest if you extend the loan term. It is advisable to extend it approximately to the time remaining on your existing mortgage.

5. Signing documents without reviewing properly: You should double-check the terms and conditions before you sign the loan documents. It is advisable that you ask for a copy of the documents and read them carefully before signing the dotted line.

In mortgage refinancing, it is quite important to shop around for rates as otherwise you may not get the best deal. Therefore, shop around and compare the terms and conditions so that you can make the right choice.