Last updated: Mar 02, 2016
refinance-mortgage
Q: What pitfalls should I avoid if I refinance my mortgage?


A: One big mistake is looking only at the interest rate. You should really consider the Annual Percentage Rate (APR), which factors in other costs, like points and origination fees. If the APR is higher than your interest rate by more than 0.5%, shop around. Dont pay points (generally 1% of your loan amount) to get a lower interest rate, either. If you, like most people, sell or refinance in a few years, you wont hold the mortgage long enough to make back in interest savings what you paid in points.

On the "Good Faith Estimate" of your closing costs, look for "junk" fees added to pad the lenders bottom line (such as "document preparation fee" or "underwriting fee"), and ask that they be taken off. Finally, make sure theres no prepayment penalty (a fee for paying off the loan before the term is up).

Q: Which home renovations pay off?

Project Cost % Recouped
Deck addition (wood) $10,601 81.8%
Minor kitchen remodeling $21,246 79.5%
Window replacement (vinyl) $10,537 77.2%
Bathroom remodeling $15,899 74.6%
Family room addition $81,315 65.9%
Home-office remodeling $28,094 54.6%

Q: How can I rent a car for less, and should I buy insurance from the rental company?

A: Try joining a company's loyalty program. It's free, and you often can get up to 20% off the rates from many major companies, as well as earn points toward free rentals. Otherwise, youll often get better rates on a rental company's Web site than if you called.

As for insurance, if you have a policy for your own car, see if it covers rental cars (most do). But buying the collision/loss damage waiver might still be worth it—in fact, I buy it whenever I rent a car. If you get in an accident, the rental-car company's insurance will take care of all the claims, so you don't have to. Having the waiver may also reduce the risk of your own insurance going up due to
a rental-car mishap.