When it comes time to go shopping for the best mortgage refinance rates, homeowners can choose from a wide variety of lenders. With the inception of the Internet, borrowers are no longer limited to the banks or lenders in their hometown. In just a few clicks of the mouse, you can view current rates and apply to refinance your home. Of course, the traditional lenders are also still available. There are advantages and drawbacks to each type of lender and it is up to you to decide which option is best for your situation.
Whether it is a locally owned community bank or a bank with branches in nearly every neighborhood in the country, banks can offer a variety of mortgage loan programs. While they offer a variety of programs, it is typically only to creditworthy borrowers. For those with blemishes on their credit, a bank may not be the best avenue.
The lending standards of banks can vary based on whether they will keep the loan in-house or will be selling your loan to another company. While your local banker is required to inform you if your loan is to be sold and serviced by another company, many borrowers never realize this. Fees, rates and lending guidelines can vary greatly dependent on what company will be servicing the loan. Many banks only keep the best loans with the lowest possible risk in-house and sell all others.
A mortgage broker gives you the chance to compare rates among many lenders. A broker can do business with almost any lender to find the best mortgage refinance rates. Because they work with a variety of lenders, they offer a wide array of loan programs. Even for those with less than perfect credit, the broker usually has lender sources that can still offer relatively low rates.
Keep in mind the broker is a middleman who is making a fee as well. In some cases, you could go directly to the lender and save this cost but it entails you doing the legwork yourself.
Internet/Online mortgage companies
With the popularity of the Internet, many borrowers go no further than their own living room to find the best mortgage refinance rates. Because you can click through several lenders in a matter of minutes, comparison shopping is much easier online. Online mortgage lenders typically offer the lowest rates because they have low overhead as compared to a local bank with several bricks and mortar branches.
Online mortgage companies also allow you to fill out your paperwork online according to your time schedule rather than the schedule of your mortgage loan officer or broker. The preliminary approval can sometimes be obtained within just minutes rather than in days with a traditional lender.
If you decide to use an online mortgage lender, be sure to investigate the company and read the fine print, as you would with any other transaction. It is always smart when dealing with any online company to check the Better Business Bureau's website so you can be alerted if there are any concerns before you complete your transaction.
Many credit unions are now offering mortgage loans to their members as well. Credit union loans are available only to members who have purchased a share in the credit union through their membership fees. Credit unions generally operate with members who share a common thread, such as working for the same company or who live in a certain area. Rates at credit unions are usually competitive to online lenders and mortgage brokers and better than banks.
Finance companies generally help borrowers with no credit history or a poor credit history. Because of their borrower base, you can expect to pay more in fees and interest through a finance company than through other lenders.
When searching for the best mortgage refinance rates, look for a lender that offers programs to closely match your needs. The Internet is a great place to start with your research and may offer the lowest rates without you ever having to leave the comfort of your own home!