Home Mortgage Refinancing Guide

Mortgage refinancing can be an intimidating task. With so many options for your mortgage loan, how do you know which one is right for you? Here are the qualities you should look for when shopping for a mortgage lender. Choosing the right mortgage lender will ensure you get a good interest rate, reasonable closing costs, and good service.

When shopping for a lender to refinance your current mortgage, look for the following qualities.

Look For a Lender With a Good Reputation

You want to choose a mortgage lender with a good reputation. Check with your local Better Business Bureau to see if complaints have been filed against them. Ask around your neighborhood to see if any of your neighbors have had dealings with that lender.

Look for Reasonable Interest Rates and Closing Costs

To find a mortgage lender that offers the best interest rates and closing costs you need to shop from a variety of lenders and brokers. When comparing loan offers pay attention to any administrative lender fees, points, and prepayment penalties. If these costs seem high compared to other mortgage lenders you should cross that mortgage company off your list.

Customer Service

Customer service is becoming a less important issue. There is no guarantee that the company you select will not turn around and sell your loan to another mortgage company. Many lenders are now outsourcing their customer service to companies in India. Customer service is a crapshoot now, plan on receiving bad customer service and you might be pleasantly surprised.

If you are a homeowner with a decent credit rating you have a wide variety of mortgage options.  The mortgage industry is extremely competitive and lenders will do back flips to get your business.  To find the best deal for you mortgage you need to compare loans from a variety of mortgage brokers and lenders.   You want to choose the best terms, interest rate, and closing costs available to you.  Here are tips to help you shop for the best lender.

Mortgage Types

The market is extremely competitive.  This is true for traditional fixed interest rate mortgages, adjustable rate mortgages, and hybrid loans.  Compare offers to find the lowest interest rates.

Fixed interest rate loans offer the lowest level of risk; you pay a little bit higher interest rate for this added security.  Adjustable rate mortgages come with lower interest rates and higher levels of risk. 

Hybrid mortgages blend fixed rate stability with adjustable rate flexibility.  Hybrid loans offer fixed interest rates for the introductory period; when the introductory period ends hybrid loans become adjustable rate mortgages, adjusting their interest rates at regular intervals.

Mortgage Term Length

If you choose a mortgage with a shorter term you will pay less for financing; however, you will have a higher monthly payment.  The most common mortgage term is a 30 year deal.  Other common terms are 15 years, 10 years, 5 years, and one year mortgage loans.

Finding the Right Lender

Traditional mortgage lenders include banks and credit unions.  Today you have many options beyond traditional lenders.  The Internet allows anyone access to a wide range of lenders and mortgage brokers.  To find the best deal for your mortgage you need to shop from a wide variety of lenders and mortgage brokers. 

When shopping for loan offers make sure you request no-obligation quotes.  You do not want lenders accessing your credit record until you are ready to submit your application.  Avoiding common mortgage mistakes is important to saving money on your mortgage.  To learn more register for our free guidebook: “Mortgage Refinancing – What You Need to Know.”