This article was originally published on Better.com
Ready to refinance? It’s time to find the right lender. We’re so confident Better is the best lender out there, we’re giving you the questions you need to test us. Here are the 5 most important questions to ask potential lenders before you refinance.
1. What rates can you offer for a no-cost refinance?
If you’re like most borrowers, you might be interested in a “no-cost” loan so your refinance has no out-of-pocket costs. Lenders often advertise their lowest possible rates, which typically don’t factor in the lender credits needed for a no-cost refinance. So while a lender’s rates might look competitive, they actually might not be for the specific type of loan you want. Make sure lenders are quoting you personalized rates based on your specific refinance goal and situation. Learn more about bait-and-switch tactics here.
2. What fees do you charge? Do you charge commission or lender fees?
Just like when you got your original mortgage, refinancing will entail fees. Some are mandatory and will be similar across all lenders (like third party appraisal fees, credit checks, flood certification, recording fees, titles fees, and prepaids). On the other hand, lender fees (like origination, application, or underwriting fees) are charged by – you guessed it – the lender. These fees can add a considerable amount to your closing costs. At Better Mortgage, we’ve eliminated both commission and lender fees, which helps keep closing costs as low as possible for our customers. Read about how Better makes money here.
3. What mortgage discounts am I eligible for?
You may think affordable lending programs and discounts are just for first-time homebuyers. But discounts are often available to experienced homebuyers and refinancers – many lenders just don’t have the tools or incentive to check your eligibility for these programs and pass the savings on to you.
For example, we worked with one refinance customer who was eligible for a HomeReady discount but wasn’t told about it when they got their first mortgage. Later, when they were looking to refinance, another lender mistakenly told them they weren’t eligible. Better Mortgage was able to help them refinance with the discount, so they paid only $137 in closing costs and saved $280 on their first mortgage payment alone.
4. Do you have a price match program?
Your current lender will likely tell you that they can get you the lowest refinance rate. See if they can put their money where their mouth is by asking if they have a price match program. At Better Mortgage, we stand by our pricing.
5. Can I get a Loan Estimate?
No matter what a lender says, the only way to compare loans apples-to-apples when you’re rate shopping is to get an official Loan Estimate, or LE. Unlike a fee sheet (or any other document a lender may give you), an LE is a standardized document detailing all the costs associated with your mortgage.
Using your Better Mortgage account, you can create your own Loan Estimates to see the breakdown of your refinance loan pricing depending on the terms you are considering.
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