WHAT TO LOOK FOR WHEN SHOPPING FOR A REFINANCE

Thinking of refinancing? You’re not alone. Literally millions upon millions of homeowners have refinanced their existing home loan. Refinancing is most usually done when interest rates are lower than the existing mortgage but a refinance can also make sense when switching from an adjustable rate mortgage to a fixed or changing loan terms to save on long term interest. Whatever the motivation, refinancing an existing home loan can be a big benefit. But with so many lenders and so many loan types, what do you need to look for when refinancing your current loan?

If you’re refinancing because rates have fallen, you obviously want the lowest rate possible. This means comparing interest rate quotes from different lenders. Which can be very, very confusing if not done right. Mortgage rates can change from day to day and even change during the course of a business day during times of extreme market volatility. This means if you get a rate quote from a lender in the morning it might have changed during the day. When shopping for rates, make sure you get your rate quotes not only on the same day but around the same time of day as well.

When comparing rate quotes, make sure you’re always comparing apples to apples. If you ask for just a “rate quote” you’ll get all sorts of rate, term and point combinations. Mortgages can sometimes be confusing enough as it is without trying to compare a 30 year fixed rate with two points and a 5/1 hybrid ARM with no points. When shopping for a refinance, always ask for the same loan type with the same number (or lack of) discount points over a 30 day period. That way you’ll truly be comparing the exact same loan.

Ask your lender if the loan will be processed and approved locally or sent somewhere else? This is often true of larger, retail banks that have a bank lobby loan officer or the approval process is done completely online, most often in another city. You want to have a local loan officer available to you whenever you have a question and someone with a solid, local reputation.

Find out what the current loan processing times are. Lenders who have a huge stockpile of loans to approve can have a backlog of weeks before a loan can get approved. This is especially important if you have to close your loan before your interest rate lock expires. And speaking of interest rates, make sure you understand each lender’s interest rate policy. Lenders are required to provide you with paperwork that outlines the lender’s interest rate lock guidelines outlining when you can lock in your rate and what happens if your rate expires while your loan is being processed. Once you submit your loan application and provide your documentation for a refinance, switching midstream to another lender can be a hassle, so make the best choice for a lender at the very beginning. 

For more information or questions about mortgage loans, 
Please visit http://www.mhlmtg.com/ecamp/fhamipem_0108fb

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