Q: I’m starting to hear about lenders who are offering 3.85 percent and even 3.75 percent on a 15-year mortgage. That strikes me as an amazing interest rate.
It might be time to refinance. How do I find a good and trustworthy mortgage lender in my neck of the woods?
A:The column policy is to not recommend individual lenders, realtors, appraisers, or anyone else involved in the real estate industry.
But if you do your homework, you should be able to find an excellent lender. Here’s what you should do:
- Find four to five different kinds of lenders and spend time chatting with each of them. You should search out a national lender, small banks that portfolio mortgage loans, a mortgage broker (ask your real estate agent for some referrals) and a credit union (if you belong or can join one).
- Check your credit history and score. Go to annualcreditreport.com and receive a free copy of your credit report from each of the three major credit reporting companies (and buy the credit score for around $9) or go to myfico.com to purchase your credit score and report for $15.95.
- Check your home equity. If you don’t have at least 20 percent in equity, you’ll have some trouble, even though Fannie, Freddie, and FHA are doing loans up to 95 percent or so. If you have an FHA or VA loan, you might be able to do an FHA or VA streamline refinance.
- Shop around. Figure out where you can get the best deal.
Once you have an idea of the rate you might obtain for your loan, you should also make sure you understand what it will cost you to obtain the loan. When reviewing the costs of the loan, make sure you understand the difference between costs that you must pay no matter what lender you use and those costs that are lender specific. You may find the charges between the lenders to be significant and those costs can affect your decision as to your choice of lender.