THE state of Michigan is home to a large number of mortgage and mortgage refinance lenders and brokers. But the market is very competitive and you can easily end up with a raw deal if you are not informed of the basics of mortgage refinance loans. In this article, we shall look at the basics with which you will be better off in your mortgage refinance search.
Brokers in michigan
This article presumes that the reader is familiar with the concept of mortgage refinance. However, just to make this article a holistic one, let’s briefly recap that mortgage refinance is the taking of a new mortgage loan to pay back your existing mortgage and then continuing to repay the new loan, the lender’s security (or collateral) for both the loans being the same property.
Mortgage refinance is a good option if you want to change the terms of your mortgage repayment terms to suit your changed needs and/or to avail of lower interest rates than the rate you were paying on your original mortgage.
As said above, the competitiveness of the mortgage loan market in Michigan can result in you being flooded with refinance offers from a large number of operators in the market, especially brokers.
Therefore, to empower yourself to make the right choice, you should be aware of the following:
- Do you really need refinance : No matter what anyone might say, lower interest rates are not necessarily the best reason for opting for mortgage refinance. This is because your concern is not the ‘theoretical’ interest rates that you read in the newspapers or hear of in CNBC, but the gross outgoings from your wallet. Interest rate is only one criterion, and the less important one. The most important criterion is the annual percentage rate (APR), which reflects the total cost of your loan on an annualized basis. It takes into account the other costs that you will have to shell out at the closing stage, and this includes upfront fees, broker’s commission, real estate agent’s commission, valuation fees, and the like.
Another important factor that you must take into account to know the total cost is the prepayment penalty you will be charged by the lender of the original loan. Even if the original lender and the refinance lender are the same, you will still most probably charged the penalty originally agreed.
So, the first thing you should do is to decide if refinance is good for you, and you can determine this initially by using one or more of the online calculators available on the websites of lenders and brokers at URLs such as: www.bankrate.com, www.erate.com, www.mortgageloan.com and others. Remember that you must honestly provide the calculators with the information they seek about you and your property; otherwise, the calculators will give you misleading results. Compare the results from different online calculators.
Once you get approximations on the refinance options available to you, and they seem to serve your purpose, then you should get in touch with brokers, whose contact details you can get from the websites whose online calculators you used.
- Is your broker guiding you correctly : It is always better to obtain mortgage refinance through a broker registered in your state because they get competitive offers from different lenders. If you directly approach lenders, you will have to choose from their own offers. It would indeed be utopian to expect a lender to guide you to a different lender in your own interest.
So, while brokers are a better option even though you have to pay them a commission if you accept an offer they bring (the commission would vary from 1% to 10% depending on your credit rating; better rating would mean lower commission), the problem is: how would you know they are getting you the best deal? For, it is possible that the broker has an ‘understanding’ with a specific lender whose products he or she is thrusting at you.
The way to tackle this risk to obtain offers from several brokers. Remember that consultations with refinance brokers, including receiving offers them, bear no obligation on you. You pay them only if you accept an offer from them – i.e., accept not just in principle, but actually take it by signing the dotted line at the closure meeting with the lender.
If you follow the above suggestions, you will be able to compare and contrast offers from different lenders in Michigan, ask questions on why differences exist, and get satisfactory answers before you choose the one most suitable to you.
Keep in mind the upfront payments you have to make for your refinance loan as well as for premature closure of your original mortgage loan. Add up all the costs to judge whether refinance will do you good before you take the plunge.