How To Compare Refinance Offers From Different Lenders

With today's low interest rates, many people are refinancing and refinancing again. In your haste to find the lowest rate before interest rates rise again, are you sure you are getting the "best deal"? What should you look at when comparing offers from different lenders? Of course, you start with the interest rates but you need to go beyond that factor to make an informed decision about the loan so that the result is the best deal for you. Here is a checklist of things for you to consider and evaluate in making your decision.

Interest Rates

  • This is the most obvious difference for comparison

Total Fees

  • Even zero point loans often involve many fees - find out all fees that you will have to pay
  • Some lenders pick up all the fees and closing costs - a zero point- zero cost loan
  • Some loans carry so many fees that they could outweigh other favorable factors

Rate Lock

  • Is it available and what will it cost, if anything?

Time Periods

  • How long until your rate lock expires? The longer the better!
  • How long until your loan commitment expires? The longer the better!
  • How long will it take to process your application? Usually, the sooner the better.
  • How soon will you be able to close on the new loan? Usually the sooner the better.
  • Remember - the longer the time it takes until you close on the new loan, the longer you will be paying interest at the old higher interest rate!

Loan Limits

  • How much will the lender lend you?
  • Can you walk away with cash in addition to the payoff for your existing mortgage if you wish to do so?

Conditions and Requirements

  • What documents and information will you have to produce?
  • What conditions will be imposed - for example - will you have to pay into an escrow each month for taxes and insurance?

Prepayment Penalties

  • Ideally there should be none at all

Lender's Willingness to Meet Your Special Conditions

  • If you have an existing second mortgage or home equity line of credit will the new lender allow you to subordinate the existing loan to its new loan? If not, you will have to pay off that existing second mortgage or cancel your line of credit.

Convenience

  • Where will you have to go to close the loan?
  • Can the loan be closed by signing the loan papers in the presence of a Notary Public and returning them to the lender without a formal closing?

 

Copyright 2011 - Marc H. Jaffe and Fromhold Jaffe & Adams


Notice: The information on this page is intended only as general information for owners of real estate in Pennsylvania and is not legal advice. You should consult with an attorney in the state where you are refinancing real estate before relying on anything set forth here. This page contains only general principles. The facts of your particular situation may warrant different considerations.