Refinance Home Loan

Question: What are the risks associated with refinancing home loan with a local lender instead of the big companies?

(Posted by: MJ on 2008-05-22 00:50:26)

We are in the process of refinancing our home & i recently submitted my contact info online & i'm receiving calls from many of the local lenders, Can anybody let me know if there are any risks associated with the small companies instead of going with big banks like Wells fargo , BOA or WaMu .. Thank u in advance ...

Posted by: If you only knew on 2008-05-22, 02:10:03

It sounds like the other person just copied and pasted some random information from a website. Hon there is not a risk; they all get their money from the Federal Reserve. What you will be dealing with is professionalism, turn around time, and fees. If you go with a smaller ma & pop shop, such as a broker or a Broker Banker, or a independant bank you are using the middleman. The Bigger banks pay these brokers a fee called a Yield Spread Premium, or YSP, to submit their loans to them. The brokers generate the application; collect the required documents outlined by the underwriter, and charge you their fees for doing so. The time in which it takes to complete the loan application depends on the speed of the broker and you to get to them what they ask for, and the volume the bank is dealing with at the time your information is submitted to them. With the broker, you are more likely to receive a higher level of "personal " attention then you would if you went with a bigger company such as WaMu, Wells, or BOA. The broker will shop around for you and determine the best loan program and interest rate based on your income, credit score, and loan amount, in addition to other determing information. Therefore, your chances are better for achieving what you are looking to accomplish with your refinance. With the broker, you are an individual, a person if you will. With the bigger banks, you are just a loan number. It could take the bigger bank several weeks to months to complete the loan process in order to get you to the closing table. That is a risk in itself I guess. How long do you have to accomplish your refinance? If you are pressed for time due to an urgent payment of a debt, you may want to go the broker route. The brokers usually know right away which lender to send the loan to in order to speed up the process. They have worked with their banks fo choice in most cases for years and are familiar with the individuals there who they can count on to make things happen quickly. Either way the period is undetermined and relies on the factors listed above. If you decide to go directly with a big bank, you would be only given what they have to offer. They are not going to shop around for you to find a different deal with another bank that may benefit you. If you don't take their deal and walk away, you will have to start all over with another bank. However, if you cut out the broker and go directly with a loan officer at the bigger bank, you will not pay the additional fees the broker would charge on top of the banks regulated fees. Therefore, you will be saving some money doing it that way when it comes to your final closing costs. If you are, doing a Cash Out Refi that could make a huge difference in your proceeds amount. I have been a Residential Mortgage Closer for 7 years and have worked for a Brokerage Firm and 2 banks, Washington Mutual and GreenPoint Mortgage. There are benefits of doing it either way. It is all in what your expectations are and what you want to accomplish. Are you looking for a lower rate? Cash out? Borrowing against your equity to pay off debts? What ever you decide to do is up to you. You will not need to worry about risk since it all ends up in the same place in the end. The servicing rights of your loan may be sold several times and the interest rate on your note will be sold as soon as possible to Fannie Mae in the secondary market. Good Luck!

Posted by: Brenna on 2008-05-22, 01:21:56

It's extremely important to understand that with a little time and the right approach getting the absolute best mortgage refinancing is not a huge problem.Companies/ businesses that arrange financial products of this nature <!--usually are very profitable and it's a good idea to remember where all the money is generated from. You, the customer are the root of their profits. mortgages-finance.awardspace.com/ best-loans.awardspace.com/ homeloans.htm Once you need to finance the buying of your own home with a mortgage, it's very important that you do your research properly and understand all of the variables. When it is essential that you get the absolute best mortgage refinancing-- >enter into some research and groundwork on your own because the Internet can equip you with an absolute pot of gold of very helpful data when it is essential that you get the best mortgage refinancing.

Posted by: Jeromy W on 2008-05-22, 06:30:58

What I can tell you is this, depending on what you submitted for your contact info, ie ss number, phone number, this could be why your getting calls. There is a little trick in completing a mortgage application where you don't submit the person's phone number initally, as the credit agencies can sell the phone number, thus the borrower getting many unsolicited phone calls. The only conern I would have with a small local lender is the technology they have, they may not be as secure as a boa or wells. There are many upsides though, the service can have a more personal feel, they usually don't have the processing backlogs the larger lenders do, and they may not be as hestiant to lend. What I mean is you've probably heard about the housing crisis, many of the smaller lenders were not exposed to this as they did not sell their mortgages and serviced them.