5 Rules for Comparing Refinance Offers

But you didn’t really need us to tell you that, did you?

Mortgage money and interest rates all come from the same places, and if something sounds really unbelievable, better ask a few more questions and find the catch. Is there a prepayment penalty? If the rate seems incredible, are there extra fees? What is the length of the lock-in? If fees are discounted, is it built into a higher interest rate?

If you're just looking for the cheapest deal out there, understand that you are placing a hugely important process into the hands of the lowest bidder. Best case, expect very little advice, experience and personal service. Worst case, you may not close at all.

All too often, you don’t know until it’s too late that cheapest isn’t BEST. But if you want the cheapest quote – head on out to the Internet, and we wish you good luck. Just remember that if you’ve heard any horror stories from family members, friends or coworkers about missed closing dates, or big surprise changes at the last minute on interest rate or costs…these are often due to working with discount or internet lead companies who may have questionable or even illegal business practices such as charging up front application fees.

Most importantly, remember that the cheapest rate on the wrong strategy can cost you thousands more in the long run. This is the largest financial transaction most people will make in their lifetime. That being said – we are not the cheapest. Of course, our rates and costs are very competitive, but we have also invested in the systems and team we need to ensure the top quality experience that you deserve.

When looking at estimates, don’t simply look at the bottom line. You must compare lender fees. These fees are the only ones that the lender controls.

Make sure lender fees are not “hidden” down amongst the title or state fees. A lender is responsible for quoting other fees involved with a mortgage loan, but since they are third party fees – they are often under-quoted by a lender to make their bottom line appear lower.

The Annual Percentage Rate (APR)? This too can be easily manipulated, and worthless as a tool of comparison.

This means that you can have any interest rate that you want – but you may pay more in closing costs if the rate is lower than the norm. On the other hand, you can pay discounted fees, reduced fees, or even no fees at all – but understand that this comes at the expense of a higher interest rate.

Either approach might be right for you, or perhaps the best approach is somewhere in between. It all depends on what your financial goals are. A professional lender will be able to offer the best advice and options in terms of the balance between interest rate and closing costs that correctly fits your personal goals.

This means that if you are comparing lender rates and fees – this is a moving target on an hourly basis.

For example, if you have two lenders that you just can’t decide between and want a quote from each – you must get this quote at the exact same time on the exact same day with the exact same terms or it will not be an accurate comparison. You also must know the length of the lock you are looking for, since longer rate locks typically have slightly higher rates.