If you’re considering refinancing you might be searching for the best mortgage company with the lowest refinance rates and fees. How do you go about finding the best mortgage company? I mean really… do you have to be a personal finance guru to make sense of all the loan documents thrown at you: Good Faith Estimate, HUD-1 Settlement, Truth-in-Lending, it’s enough to make you cross-eyed. Here are several of my best tips before you refi to help you find the best mortgage company without paying unnecessary fees.
Beware Sucker Fees When Refinancing Your Home
It’s no secret that mortgage refinance rates are at historical lows and with the government doing everything they can do to pressure the bond market trying to push mortgage rates lower, what’s a lender to do but charge higher fees? The problem with these unnecessary closing costs, I call them “Sucker Fees” is that they lengthen the amount of time it takes to break even on your out-of-pocket expenses, often negating any benefit you’re getting from mortgage refinancing. This is a common practice even the best mortgage companies are engaging in; you can’t really blame them, the mortgage industry is profit driven like everything else.
Before you feel too sorry for your best mortgage company, remember that they’re profiting at your expense AND as a savvy homeowner you want to pay them as little as possible by avoiding sucker fees.
The first mortgage refinancing truth you need to know about these sucker fees is that all the closing costs you find on your Good Faith Estimate (home of the sucker fee) and HUD-1 settlement statement are negotiable and vary hugely from one lender to the next. There’s no standard fee when it comes to mortgage refinancing, even the best mortgage company sets closing costs based on what they think people will pay. The more people pay just because they think that’s the way it is, the happier your best mortgage company is to go on overcharging you.
Recognizing Sucker Fees on Your Good Faith Estimate
One of the most common mortgage mistakes when refinancing is overpaying the person arranging your home loan. This loan origination fee is charged by the broker or company processing the paperwork on your refi. How much is reasonable to pay for the mortgage broker fee? One percent is perfectly reasonable; however, many brokers charge double, even triple just because they can. (And people are used to overpaying.)
Other sucker fees include mortgage rate lock fees (a sure sign that you’re dealing with a dishonest loan originator), application fees, processing fees, and courier fees. If you find anything like these on your Good Faith Estimate it’s a sure sign that you haven’t found the best mortgage company for your next home loan.
Who’s the best mortgage company for your next home loan? Is it an industry giant like Amerisave (check out my Amerisave Reviews for more) or should you focus more of your effort on finding the right person to arrange your mortgage refi? Remember for the most part you’re dealing with third parties reselling home loans from wholesale lenders, unless you refinance with your bank and there are several good reasons why banks might not be your best mortgage company. (That’s a story for another day)
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You can learn more about finding the best mortgage company for your next home loan while avoiding sucker fees by checking out my free Underground Mortgage Videos.
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