Refinance research

graywings123October 20, 2010

I contacted my lender regarding a refinance and was offered a rate of 4.375 with one point on a 30 year fixed mortgage. Can anyone give me advice on the best ways to research to see if someone can beat that offer?

Internet research is a wonderful thing, but there are downsides, such as not knowing the reputation of the potential lender and exposing yourself to spam and unwanted telephone calls. Lending Tree, for example, gets its share of complaints on sites like epinions.com.

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dave_donhoff

Hi Graywings,
Unless you have a really tiny mortgage balance, that 4 3/8 at a 1% cost is WAYYY out of competitive range right now.

Shopping retail is a tough way to get the best deal. If you retain a trustworthy* broker, you're far more likely to end up with a better result.

(*by "Trustworthy" I mean much more than you like them & think they're competent & honest. I mean that they'll agree to a specified absolute & non-changing total compensation package for their services, and pass through to you the naked "wholesale" rate & fee pricing from their best wholesale resources.)

Good luck!
Dave Donhoff
Leverage Planner

My longtime tagline rant;
Choose your provider according to preliminary "quotes,"
And you've simply chosen the most successful Liar.

Choose according to character quality, competitiveness,
honesty, and your personal assessment,
And you will set yourself up for the better Experience AND
the better bottom line pricing!é

    Bookmark   October 20, 2010 at 3:17PM
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Billl

New laws make most of the liars into criminals. Lenders are required to provide a good faith estimate of all costs and they are prohibited by law from changing that estimate significantly. Of course, there are still scammers out there, but that is the exception, not the rule.

Of course, if you have a wonderful, trusted adviser, great. I suspect that isn't the case since you are asking online.

If you want a low tech starting point, grab an old fashion Sunday paper and start calling around. Just like a broker would have access to a lot of different loan options, you'll need to find out what your option are and it is going to take a fair amount of legwork.

BTW-LendingTree is a 100% legit site. You sign up and lenders will call you. That is the point. If you don't want calls, do not sign up there. Of course, there is no reason to expect the 5 lenders who call to have the best options for you though.

    Bookmark   October 20, 2010 at 4:09PM
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dave_donhoff

Hi billl,

New laws make most of the liars into criminals. Lenders are required to provide a good faith estimate of all costs and they are prohibited by law from changing that estimate significantly.

If only that were true... unfortunately, the legislators completely failed to listen to the legitimate voices from inside the industry, and promulgated a process that is now *WORSE* for the rate-shopping consumer than before.

A) total costs are *NOT* disclosed on the new 4-page GFE anywhere,

B) old-style good Faith Estimates (which *did* disclose all costs) are prohibited from being issued (not merely not-counted... legally PROHIBITED!)

C) there is a 6-piece trigger list of information that a lender *MUST* have received before they are required to issue a binding GFE (which, as above explained, is worthless anyway.) Its very very easy for a lender to refuse (or simply not request) one of the 6 pieces (i.e. a Social Sec'y number, for one) and thereby be legally free to provide some alternative "estimate quote" that is not held to the GFE accuracy standards,

D) it is now standard practice, especially by retail banking lenders, to refuse to issue a GFE until after the applicant has leapt through the majority of the administrative hoops (which, psychologically, tends to dissuade that applicant from going through the same gauntlet again, let alone many times, in an attempt to "comparison shop" (which is futile when not done on the same day anyway.))

E) the legislation *STILL* allows retail banking lenders to HIDE their rebate revenue fees (which brokers have always disclosed.)

Believe it or not, the old 1-page GFE, disclosing all borrower costs, was far more complete and useful to a borrowing applicant (and as accurate as the character of the professional providing it.... which is the same as the realities now.)

Of course, there are still scammers out there, but that is the exception, not the rule.

I'd say it depends on your definition of "scammer." The standard of the industry today is systematic confuscation (even worse than ever before.)

Its really unfortunate... and what's worse, the remaining quality players are migrating to less abusive, less complicated, more profitable service businesses.

What's left is mostly very unsophisticated, young & inexperienced clerical "product pushers."

Cheers,
Dave Donhoff
Leverage Planner

    Bookmark   October 20, 2010 at 5:20PM
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brickeyee

Until there are penalties for not meeting the good Faith Estimate the laws are all a lot of feel good hot air.

HUD lost a case trying to impose actual penalties a while ago.

Banks give more campaign contributions than borrowers I guess.

    Bookmark   October 20, 2010 at 9:08PM
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