With interest rates still at historically low levels, many homeowners are discovering they can refinance to lower their interest rate, drop PMI, pull cash out, or move to an aggressive shorter-term mortgage than ever before due to global and economic events presently happening in the coronavirus pandemic.
Where to get your mortgage, and more particularly, how to decide what mortgage company to use can make all the difference between making a good decision versus a bad one. The options for refinancing your home mortgage are literally endless as there are so many different choices. Looking at interest rate alone should not be the focus; it should be part of the overall collective decision, but it should not be the number one driver.
You may want to consider working with a loan officer who is responsible for procuring their own business. That’s very different than a loan officer who works from a call center, or a loan officer who is an order-taker at a big internet lender. The difference is this: if you work with a loan officer who is responsible for generating their own business, they are financially vested in making sure you’re happy and satisfied with their services, rates, and terms because if you’re not, they don’t earn any money. This is a very different platform than a company that produces spoon-fed business to their loan officers.
This being said a loan officer who is responsible for obtaining their business can be your advocate for a number of reasons:
• On-time closing
• Timely communication
• Future opportunities
Here are the mortgage options
Internet lender -The big-box mortgage lender advertising at the Super Bowl about how easy their online process is really putting you together your own mortgage. Most consumers do not typically have the type of time, energy, and resources necessary to put together their own mortgage from start to finish which essentially is what you get with an Internet-only mortgage company. Most, not all, but most Internet-only lenders have spoon-fed business to them are compensated whether your loan closes or not. The internet is not necessarily bad, but you should be very careful who you’re selecting to handle your home financing with you if you choose to use an internet lender.
Bank credit and credit unions are always good places to borrow money. They are in banking so it is only logical your local bank could be a good place to get a mortgage and very well could be if you have anything unique or complex in your financial profile or if your property is perhaps mixed-use, there’s a construction element, or it’s anything outside the typical box residential financing. A local bank can really shine in all those above areas. Banks and credit unions are in the banking business offering such products as various sorts of bank accounts, financial services including retirement services, trust services so they sort of a one-size-fits-all approach. Due to this, banks are not very mortgage aggressive or mortgage specific and in some cases mortgage competitive, so this is something you want to take into consideration if you’re going to do a refinance with the bank.
Current loan servicer is always something that consumers might want to consider but keep in mind how you got your current lender. If you got your current lender from a loan officer who is responsible for generating their own self business, this could be in your favor a wildly as you get the benefit from the banking side and you would also get the benefit from the relationship side. If you got your current mortgage company because the old mortgage company just handed them to you that’s a different situation. It goes back to the same model bank loan officers are a handed business. Their tagline is work with us because it’s going to be easier to refinance when that might not necessarily be true because they want the same paperwork any other mortgage company would want anyway because all the loans being originated today are going FHA/VA or conventional and they all require the same paperwork across the board. The is exclusive of Jumbo-sized mortgages.
Mortgage brokers used to be the mecca of where to get residential loans. Mortgage brokers are good options particularly in situations where there is either user unique financing needed, in some cases jumbo financing needed, and you get that personal relationship so that has some intrinsic value. The challenge with working with the local mortgage broker is if they don’t have any control over the loan process. This also means more than one credit pull.
Direct lenders who employ self-generating business loan officers is another good option. This option generally is the best of all the worlds and the reason why is because they have the ability to fund and control the process from start to finish typically only need one credit inquiry. Direct lenders also are often aggressive on rates and fees and a lot of those lenders service their loans which would help with that original model if you’re looking for a mortgage professional that can support a relationship with you held over the course of time.
At the end of the day, whoever you decide to handle your home financing should be someone who is sincere, honest, and is interested in the long-term financial picture which means putting your interest above their own. Many consumers may stand to benefit from working with a loan officer responsible for generating their own business, as the value over time very well may result in a lower cost of funds.
Scott Sheldon is a local mortgage lender, with a decade of experience helping consumers purchase and refinance primary homes second homes and investment properties. Learn more at www.sonomacountymortgages.com.