How to find the best refi rate? Shop around

October 21, 2011

Q:

I heard you on the radio last weekend talking about refinancing. It sounds like you got a really good interest rate. My problem is that I don’t know how to find a good mortgage lender.

There are so many ads online that I don’t know who to trust. What are your thoughts about trying out an online refinance company vs. working with a trusted bank? Where do I start? And can you recommend someone you trust?

First, we don’t recommend individual lenders to our readers and radio listeners. That’s primarily because there’s no way we can keep tabs on everyone who is good all over the country.

However, we can recommend a foolproof way to find a good mortgage lender, and it starts with doing some homework. We believe that if you speak with at least five different types of lenders, you’ll learn enough about where your local mortgage market is to make a smart choice for yourself.

Consider speaking with someone in each of these categories: a big national bank; a credit union; a qualified and highly recommended mortgage broker (check with your local real estate agents; they usually have a list); an online lender; and a small regional lender.

You’ll need a current credit history and credit score. If you haven’t already used them up, pull a copy of your credit history from AnnualCreditReport.com, the only site that the Federal Trade Commission (FTC) requires the three credit reporting bureaus to maintain. While you’re there, pay around $9 for a copy of your credit score.

If your credit is good, then next thing to do is figure out which kind of loan you want (most people are getting 15- or 30-year fixed rate mortgages because interest rates are at or near an all-time low). If you have less than 15 years left on your mortgage, consider refinancing to a 10-year loan.

Then start shopping around. Call the various lenders and ask them how much they charge for a particular loan, based on your current credit history and score. Ask them about the fees they charge and try to get as much detail as possible. Let them know you’re shopping around.

Only by comparing and contrasting will you figure out which lender is best.

Q:

I am buying my first home, and I’m wondering how I actually pay my down payment at the closing. The real estate agent asked me for a small check as a good faith deposit, but I can put down more — and want to.

Should I bring cash to the closing? If not, will the sellers take a personal check?

Personal checks are not accepted at the closing table for any amount over a few dollars. That’s because it is easy to pass a bad check and no way to truly verify that the funds are in your account at that moment.

Unfortunately, title companies and escrow companies don’t take cash. (Really, would you come to the table with $50,000 in cash?)

Instead, you’ll want to have a cashier’s check drawn at your bank. The bank will verify that the funds are in your account, and that should be good enough for the title company. These days, more title companies and closing agents will require you to wire transfer the funds from your bank account to the title company’s or closing agent’s bank.

If the closing agent has the funds in its account, the closing agent has a greater comfort level to close the transaction.

Your closing officer at the escrow or title company (or real estate attorney, if you’re using one) should be able to provide you with a list of items needed for the big day. However, your lender, if you are using one, should have given you an estimate of most charges you might expect to see at the closing, along with an estimate of the amount of money you will have to bring to the closing.

Ilyce R. Glink is an author and nationally syndicated columnist. Her latest book is “Buy, Close, Move In!” Samuel J. Tamkin is a real estate lawyer in Chicago. If you have questions for them, write to Real Estate Matters Syndicate, P.O. Box 366, Glencoe, Ill. 60022, or contact them through thinkglink.com.

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