Every year, thousands of homeowners refinance their mortgage loans in order to take advantage of low interest rates, make important upgrades and renovations to their homes, consolidate old debts, pay for college expenses and even change to a shorter loan so that they can be debt free more quickly. If you’re thinking about refinancing your home loan, the first step is selecting the best refinance company for your personal situation.
There are hundreds of refinance companies out there. So, how are you supposed to pinpoint the one that will give you the best service and the best refinancing rates? The following advice can help, and the search may be easier than you’d think.
Your existing mortgage lender might be the best refinance company
Sometimes, the best refinancing companies are right under your nose. Your existing mortgage lender may be willing to refinance your home loan. If you have always been on-time with your payments and have a long history with the lender, they may be amenable to setting you up with a very competitive mortgage refinance.
That’s because they’re still going to make money off your mortgage. They may sell it to an outfit like Fannie Mae or Freddie Mac, or they may hold on to it. But one thing they won’t be doing is losing out. You’ll still pay an interest rate and closing costs on this refinanced loan, and that interest rate will reflect whatever the federal interest rate is. In other words, they’re not going to lose your business over a lower monthly payment when their profit is based on the difference between the interest rate at which they borrow money and the interest rate they charge you.
Refinancing also extends the life of the loan in most cases. So, even if they take less total money from you month over month, their making money from your loan for a longer amount of time.
But take your experience with them into account, too. Have they been prompt and courteous when you’ve needed their help in the past? Have you been satisfied with their level of communication and customer service? Do they have a track record as good corporate citizens? If so, you have even more reasons to work with them to refinance your loan. If not, scratch them off your list, and feel empowered doing so.
Find refinancing companies on the internet
Comparison shopping is a surefire way to know what you’re getting.
Today’s best refinancing companies maintain easy-to-use websites. Those websites typically boast intuitive interfaces, informative calculators and other features that make it easy for you to see what they have to offer. As you conduct your research about various refinance companies, always pay visits to their websites.
You can’t always judge a book by its cover, but judging a lender by their website never hurts.
While you’re visiting each site, submit a quote request form to get the ball rolling. And if they have a calculator that produces estimates, compare that estimate to what you get face-to-face. The closer they are, the more you can rest assured you are dealing with straight shooters. If their calculator produced something unrealistic or something you don’t even qualify for, then that widget was just a way to get you to walk through their door. In that case, you may want to walk right back out.
Conversely, if they are not good, you should find negative comments. When you look at a third-party review and commentary sites remember that even the best companies will have one or two dissatisfied customers. Focusing on the overall trend of the comments will give you better information than just reading one or two horror stories.
Shopping around to find the best home refinance companies can help borrowers save money in the long-run. (Photo/Pixabay)
Look in your own backyard for the best refinancing companies
If you prefer working with a refinance company on a face-to-face basis, restrict your online searches to refinance companies that are in your own backyard. Pay each prospective company a visit to see what kind of rapport you have with them.
Local banks might include credit unions or community banks. These banks tend to be not-for-profit which can open the doors for increased savings and lower rates for their customers.
If it’s a lesser known bank, just dig deep to ensure they have a top notch reputation. Check with the Better Business Bureau to make sure there are no negative reports on their record. At the end of the day, you may discover that the best refinance company is within easy driving distance of your home.
Compare your research
You can ask potential lenders to do a bit of legwork, too. Ask them to provide you a good faith estimate so you can compare the closing costs from lender to lender. Compare these figures to the best APR a lender is willing to offer you.
Take the time to crunch the numbers. Use a mortgage calculator to compare the new terms you’ve been offered to your current loan terms. Crunch the numbers on your break even point to make sure that you’ll live at your residence long enough to enjoy the benefits of refinancing.
Take into consideration less traditional refinancing options like a “no closing cost” and “no cash required” loans if your lender has offered them.
Don’t forget to look at the lock periods, too. Longer locks typically cost more money, so if everything is equal, the loan with the longer lock will be worth more to you, especially given the long time that it can take to get a loan closed today.
Finally, check out our Mortgage Lenders page and our Mortgage By Area Page. A bit of research into your lender’s reputation and products can go a long way in your refinancing journey. If you have difficulty making a decision about a lender, try working with a mortgage broker. They have relationships with many different lenders and can assist you in picking someone that suits your needs best.