During the past couple years in which the mortgage market has been in turmoil, determining who are the best refinance lenders has become a real challenge. While current interest rates are still at historic lows, the fact remains that the lending guidelines have tightened up to a degree that is unprecedented. So much, in fact, that the average loan officer has trouble keeping up with the constant guideline changes and hoping to provide a high level of customer service. This challenge is resulting in the weaker loan officers leaving the industry and the pro's within the best refinance lenders now getting the lion's share of the market.
During your search for the best refinance lenders, its crucial to remember that the same primary hot buttons remain unchanged: First, keep in mind that the lenders with the lowest rates may not be the best deal overall. Even the best refinance lenders often forget to properly disclose the fact that their apparently low rate includes "discount points". This additional fee may be getting you what appears to be a great low rate, but you do not necessarily need to pay any additional fees to get a good rate. Always ask even the best refinance lenders to give you options and proceed carefully.
How to find the best refinance lenders?
Whenever you embark on a search for the best refinance lenders, you will find numerous lenders trying to attract you with their seemingly lucrative offers. However, you must know that not all of them can offer you the best loan. Some of the best refinance lenders' reputable brand comes from millions of dollars they spend on expensive advertising. Those TV ads and billboards may help you recognize their brand, but it works against you in regard to their ability to get you the lowest rate. All that overhead costs money, some of which is passed down to you, the customer. The key to remember is that the best refinance lenders are not always the ones with the most well known brand name. Do your initial research online to compare mortgage rates and terms so you have all the necessary information to form an education decision.
Here are some points to consider while searching for the best refinance lenders for your your home loan:
1) Start by leveraging the power of the internet. A simple search for the best refinance lenders on online will yield thousands of results, but the key is to start with the more reputable "portal sites. Try to not be diverted by flashy-looking promotional ad banners and buzz word offers but instead try and focus on the numbers: rates, APR, total fees, etc. These websites have gotten really good and organizing the best refinance lenders' rates and terms so check to see what the top 3-5 offers appear to be within the name loan type category.
2) Be weary of excessive fees. In most cases, the "lowest rate" offer often comes with some hidden costs, which can quickly add up since they are usually percentage-based figures tied to the loan amount. These extra costs, also known as " junk fees", can make your refinance a costly transaction and sometimes not even worth it anymore. These "junk fees" include but are not limited to: "processing fees, application fees, doc prep fees, courier fees for mortgage brokers, etc." A good rule of thumb to use when considering the total cost, even with the best refinance lenders, is "how long will it take for the proposed monthly savings to exceed the total cost of this transaction?". Example: Lets say you stand to save $52/month but the total fees are $3572. It would take you a whopping 68 months (over 5 years) to break even! Any break even point longer than 24 months is not a good deal.
3) Think you've found the best deal now? Be careful, you might also want to ask what documentation is going to be required. This is a major factory in getting any refinance transaction closed these days. Some bank's guidelines have got so ridiculous that it seems like the hurdles between you and the closing table can never be overcome. Most banks follow the same set of guidelines nowadays, all requiring the standard two years tax returns with W2's, last two pay stubs, and last two bank statements. However, I've heard of some real world situations recently that you probably wouldn't even believe. A good friend of mine was trying to get the third round of underwriting conditions satisfied when she was then told that she also needed to produce the original building permit for the apparent renovation work that was done to her kitchen from 9 years ago, when she had only owned that home for the last 5 years! This means that she was forced to take a full day off work and beg City Hall to dig up old building permit records just to satisfy the lender and get her refinance closed. Crazy, huh? But you'd be surprises how often even the "best refinance lenders" come up with these crazy underwriting conditions. The key is to always ask what documentation will be required up front.
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