How to Choose the Best Mortgage Refinance Lender For Your Needs
When you need to refinance your mortgage, it’s important to find the right lender. Not only can this help you save money on your monthly payments, but it also can allow you to access your home’s equity for any needs you have.
The best mortgage refinance lenders offer a variety of loan options and are able to provide competitive rates. But not all lenders are created equal, and choosing the right one for your specific situation can be challenging. Here are some tips to help you narrow down your search and choose the right lender for you:
Credit score & debt-to-income ratio (DTI)
Lenders will give you the best rates when you have good credit and a low DTI. This means you’re able to pay your bills on time and keep your other debts manageable. Having high debts can lead to higher interest costs, and lenders are more likely to reject your application.
Get preapproved for a mortgage
Before you can apply for a refinance, you need to have a clear idea of how much your current mortgage is, and what type of loan you’re looking for. This will ensure you don’t apply for a loan that is too large or too small for your needs. If you’re unsure of how much your home is worth, start by using the mortgage calculator on Zillow or other websites to estimate the value of your property.
Shop for the best mortgage rate and fees
When shopping around for a new mortgage, it’s always wise to get quotes from at least three lenders. That way, you can compare the different offers side by side and see which loan amount and interest rate is best for your goals.
Ask for a breakdown of all fees associated with each lender’s offer and how those will affect your payment. These can include things like loan origination, processing and appraisal fees. These fees can add up to a significant sum, so it’s important to understand them and how they will affect your overall cost of borrowing.
Avoid a “no-closing-cost” refinance
Many lenders will offer a no-closing-cost mortgage that eliminates the need for you to have cash ready at closing, but it’s important to understand that these loans usually come with higher interest rates and lower loan amounts than traditional ones.
Consider a cash-out refinance if you want to use the funds to pay off your existing loan, make home improvements or finance other expenses. These loans typically have slightly higher interest rates than traditional loans, but the extra cash you’ll have at closing can help you achieve your financial goals more quickly.
Don’t just focus on the lender you choose; it’s also important to make sure you work with a reputable loan officer who will help guide you through the process and explain all of your options. You can check reviews of individual mortgage professionals online to make sure they’re knowledgeable about your specific needs.
You may also want to consider a mortgage company that has a reputation for fast, convenient and easy-to-use mortgage services. Companies such as Better offer all-online mortgage processes and handy user dashboards that make the entire process streamlined. In fact, the company claims to close mortgages about 10 days faster than industry averages.