How to pick a refi lender?
July 17, 2010 10:25 PM   Subscribe

After a healthy search, it's clear there is lots of interest in refinancing now given the historically low rates - but how did you pick your lender? What question did you ask that sealed the deal or exposed the cheat?

I'm several days into the process using Lending Tree as a start. I don't know who to trust. The more people I talk with - big banks, small banks, brokers - the less people I seem to believe.

I've now started to ask for GFE (Good Faith Estimates) from my finalist lenders - something in retrospect I should have asked for first. This seems like a good start, but I can't help but think there are other things I should be doing to find the right lender/broker.

Bonus points for anyone who can comment on amerisave which purports to have great rates and came up on some of the MeFi related refi questions in the past...
posted by NoDef to Work & Money (4 answers total) 2 users marked this as a favorite
 
Read the contracts on the day of signing. All of them. Every page. Take your time. That's how I found out (on, like, page 74 or somesuch) that my "15-year second mortgage" was actually an interest-only 15-year mortgage with a balloon payment (of the entire loan) due at the end. Her response -- when I pointed it out -- was "I was just trying to keep your payment low!" so I made her sit there while I ran the numbers, and figured out that the difference between her crap loan and one that would be paid off in 15 years was less than $200 a month.
posted by davejay at 10:37 PM on July 17, 2010 [3 favorites]


Regarding asking for GFEs... There are regulations about lenders having to eat it if certain charges are more than some % (10, I think) larger than they state them on the GFE. As a result, GFEs are often hugely inflated. And the larger they are, the more risk-averse the lender is... My most recent one showed closing costs three times greater than they actually were (for a purchase, not refi). But I don't think that reflected poorly on the lender in any way.

We went with Wells Fargo, in case you're interested, and have used them on several mortgages in the past - always been happy with them.

Also, you don't have to wait until the day of signing to start reading documents... read every document you receive before closing, too (there will be lots).
posted by jshort at 6:43 AM on July 18, 2010


Credit Union. My credit union was obligated to keep the processing of my loan. Way easier to work out any problems with a local branch than a remote megacorp, an experience I've unfortunately had. They also would never pull that nonsense with trying to hide a balloon payment. They are likely to offer slightly better closing costs and competitive rates.

GFE may max out pre-paid interest. Mortgages are paid in arrrears so you pay pre-paid interest for the 1st loan period.
posted by theora55 at 12:29 PM on July 18, 2010


Credit unions don't always have the best deals, and you may have to look around a bit to find out which ones you're eligible to join, but you pretty much can *trust* that they're not out to screw you. Find one; talk to them.

And when you do comparisons, make sure they're as close to apples-to-apples as possible: down payment percentage, duration, and interest rate. For the latter, you can shift (say) a 4.5 to a 4.75 by having the lender pick up more of the closing costs, if you want an absolute match.

The law has recently changed, I believe, to give you more protections. But given that this is probably the largest financial transaction that you'll ever make, you should not only be familiar with those protections (such as getting some critical documents in advance of signing) but also should buy a couple of books. Nolo Press has great books in a number of fields of this type. But any good bookstore will have at least a couple. And look for skeptical ones.

Wells Fargo and other really big banks are likely to be ethical, as are credit unions, but there are a lot of other lenders who are going to try to get you to pay a higher interest rate than you need to (huge win for them), or add junk fees, or try to convince you that things like interest-only and balloon payment loans are really good things.
posted by WestCoaster at 5:13 PM on July 18, 2010


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