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Home Mortgage and Equity Loans and Refinancing (fair to perfect credit) (brokers and direct lenders)


LendersRated pick among peers for features, honesty, customer service, and policy Quicken Loans

LowerMyBills Take advantage of the currently generous government refinancing programs.


Pitfalls to Finding a Good Home Loan Lender and Interest Rate

Not long ago, rate shopping for refinancing your home was limited to telephoning local banks. Nowadays, you can expand your search to the Web to search for loan originators such as Quicken Loans as well as brokers which represent the loan originators.

Aggregating Sites
One of the first and leading sources for searching for multiple lenders is Bankrate.com. Another excellent site is HSH.com. These sites allow you to compare brokers' and banks' rates. Although they accept advertising, (and lenders pay for inclusion in Bankrate.com's search results), they are largely unbiased. Also, because of Bankrate.com's size, it includes a large and diverse selection of lenders.

On the Bankrate.com site, in order to search for lenders rates, first click on Compare Rates, then navigate to the type of loan you seek. When the list of lenders appears, sort by APR. Ignore the rate column, because the lender may offer an artificially low rate then make it up through significantly higher fees. See the article to the right on a further explanation of the value of using APR to compare lenders' rates.

Avoid Web Search Engines
You can also use the search engines such as Google, but this approach has disadvantages. Lenders buy search terms to be at the top of the search results. Further, there are no tools to compare one lender with another on the search engine result page, so it is like a shotgun approach. The HSH.com and Bankrate.com sites do a much better job of giving you comparison tools.

The Credit Score Pitfall
Lenders many times will tell you that in order to give you an accurate quote, they must obtain your credit report. It is true that your rate may be based in part on your credit score. But even if you know your credit score with one of the big three credit reporting agencies, such as Equifax, the lender may have their own scoring calculation method. So a lender may say, "You can get the best rate with a credit score of 750". But, this doesn't mean that it is the same 750 as Equifax's.

So if the lender has their own scoring method, you will not get
an exact rate quote without first allowing the lender to get your credit report. Many credit reporting agencies and lenders will lower your score slightly for every inquiry to your credit report for the purpose of obtaining additional credit. Also keep in mind that the lender cannot get your credit report until you give them your Social Security Number, either on your application or verbally.

If Your Credit Score Fell into a Pit
A large group of Americans have credit scores below what banks allow for a home loan. But there are many lenders who will still lend to this group at rates that are not so high. Here we list lenders that lend to those with lower credit scores.

Incorrect Data Invites Bait and Switch
Another common pitfall is insufficient up-front disclosure on your part. Let's say you find a good rate quote and lock it. Then 25 days later, after the lender's underwriting department has reviewed your application, they discover that your net worth is lower than what you reported. At this point, they have the right to decline your application at the rate quoted.

Then, many times the lender will offer you a different loan for your slightly higher risk category at a higher interest rate. In the mean time, especially in today's rate environment, the interest rates may have risen one-quarter of a point. You did not lock for the new loan product for which you now qualify. So you not only must pay the higher rate of the higher risk loan category from the lower risk category, but the rates for both loan categories rose one-quarter point overall. Not a pretty scenario.

Recommended Broker Listing
LendersRated has researched and chosen the best brokers and direct lenders. Good luck in your quest for a good rate in today's treacherous lending environment.


 
 
       

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