How to Select a Lender for Home Refinance

It's wise to research lenders carefully before you refinance.
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When you’re exploring the process of refinancing your mortgage, you’ve got lots to think about. Finding a refinance loan is not that different from finding an original mortgage – you’ll have many of the same concerns and questions. As you select a lender for a home refinance, it will be important to find a reputable company that will provide you with high-quality service and competitive rates.

Step 1

Research the reputations of each lender you are considering for your refinance. The trustworthiness and ethics of a lender are important, because these attributes can have a significant effect on the course of your loan. Contact the Better Business Bureau and perform a search for each lender you are considering. If you find claims or issues connected with any lenders, remove them from your list. Visit the FDIC website and use the "Bank Find" tool to research lenders. Enter the lender's information into the applicable fields and click "Find." You will get information such as whether the lender is insured and historical information about the lender. If you are researching local lenders, contact the local chamber of commerce to inquire about a lender’s reputation.

Step 2

Contact each lender to inquire about refinance rates and terms. Ask about refinance fees associated with processing the loan. Find out what the interest rate will be and whether the lender is offering a fixed or variable rate. A variable rate may be a risk if interest rates increase over the term of the loan. Ask lenders whether you can lock in interest rates quoted to you and whether you receive a charge for locking rates. Find out what the monthly payment would be for each lender’s refinance package so you can compare this bottom line. Ask lenders about prepayment penalties for the refinance loan.

Step 3

Make an appointment to interview at least three lenders — in person, if possible — to get a feeling for the quality and depth of service offered by each lender. As you sit and talk with each representative, you should get a feeling of trust and genuine helpfulness. If you feel pressure or hard-sell tactics, avoid a lender. Ask questions about the refinance and the loan process during the interview and gauge the answers. A lender should provide answers that you can understand – not answers in highly technical jargon that fly over your head. Ask lenders for contact information of satisfied customers. Find out who will service your loan – if a lender plans to sell your loan quickly, you won’t be able to ascertain what type of customer service you’ll get because you’ll be dealing with a different company.

Step 4

Contact the references you received at the interview. Ask questions about the services provided by the lenders. Eliminate any lenders if you get negative feedback from references.

Step 5

Assess the information you gathered about each lender. Make your final choice based on the lender’s reputation, the terms of the loan and the feeling you got when you spoke with the lender. Don’t automatically just choose the lender with the lowest rates and terms – service and reputation are just as important.

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