When making a major purchase such as a home or car, the decision making process may be very demanding. Indeed, it is imperative to shop around, but it is equally important to compare apples to apples so that all options are reviewed on a level playing field. Choosing a mortgage refinance is no different. It is ultimately a major decision impacting your life probably more than anything else. It may cost you money to refinance, it may increase your monthly expenses, it may increase your total debt load, and it will certainly make your situation better or worse depending on your choices and eventual decision. Needless to say, in order to choose the right mortgage loan, you must compare multiple refinance offers.
Unfortunately, it is not enough to look at one offer against another and say that one interest rate is lower so go with that loan. In most instances, all things are not equal. For example, the interest may be lower, but the terms are such that you build little equity.
Further, the other costs may actually increase the “real” interest rate to a much higher amount than an offer that appeared to have a higher interest rate. The offer with the higher interest rate may turn out to be the best choice and cheaper in the long term.
To start comparing your multiple refinance offers, set up a spreadsheet that includes the lenders’ names, the stated mortgage refinance rates, the real interest costs (sometimes referred to as APR), brokers’ fees, lawyers’ costs, any other fees associated with the loan, the cost to renew the mortgage when the agreement is due, how much equity you will have at the end of the term, and how much you will have paid the lender. By seeing everything in columns, you can compare factors and actually have numbers from which to make a decision. Realistically, it is impossible to decide upon a lender without having all the facts documented.
Today, there are different ways to compare lenders and multiple refinance offers. You can use the traditional way of finding ads in newspapers, you can find a broker to help, or you can use any of the many websites that offer mortgage information. Some of the companies who own these types of websites even offer quotes in seconds or minutes. We are one of the premier web sites for mortgage refinancing, and are proven to be not only a safe option, but also often the cheapest option available. But, again, it is up to you to compare offers logically and with proper due diligence.
Lastly, until you get a firm written commitment from a lender, do not assume that just because you have multiple offers, that you are assured the home loan refinance.