Is refinancing your home with a direct mailer lender a good idea?

Many homeowners are often inundated by the amount of junk
mail offers they receive each month. Here is what to think about if
you’re considering refinancing with a direct-mail solicitor…

Confusing pitch

You receive a letter in the mailbox about a refinance offer saying
the mortgage offer is a fixed rate loan with an ultra low interest-rate.
Lenders have to disclose the annual percentage rate when advertising.
The annual percentage rate is a disclosure item representing the total
cost of the mortgage. Say you see a 30 year fixed rate loan advertised
at 3.25%rate sounds like a good deal right? Do not be fooled by ignoring
the APR. If the APR is anything in the 4% range or .5 more in the rate advertised you would be paying a colossal amount of points and fees
to get that interest rate. It may sound like an enticing offer, however
in most instances you can probably do better. Don’t buy into an
advertisement that seems a little fishy. The old saying applies “If if
walks like a duck, looks like a duck, then it is probably a duck.”

Your time

Plan to invest a considerable amount of your time in putting together
your own loan. Think about it, direct-mail mortgage companies are high
volume shops where numbers are the name of the game. You will do
business with them on their terms which means they paper push resulting in you structuring, pricing, packaging, setting up and establishing your own loan.

Easier process

The pitch is “working with us be easier because we own your loan”.
Unless you have a financial hardship refinancing with your lender is not
automatically easier, moreover, they will need an appraisal and all the
paperwork the local lender down the street needs too. Another pitch you
will see is light or little documentation. They reality of it is
today’s mortgage loan world is a full doc where ability to repay must be documented.

Mortgage tip: An FHA Streamline Refinance requires very little or no
financial documentation if you are refinancing an FHA loan to a new FHA
loan. This is due to the program under the same hub of the federal
government.

Lending relationship

The loan officer on that snazzy loan offer is probably hundreds of
miles away. You will need to trust your social security numbers to this
individual and their organization. Do your research.

Ultimately, the choice is yours on who you decide is the best fit for
you financially. Work with someone whom you feel comfortable who you
like and trust. If that is a representative is at your current mortgage
company, so be it. Unfortunately, you’ll likely never actually meet the
person that you’re working with if you choose to work with a lender that
is servicing your mortgage or anything other direct mail mortgage
company for that matter. Traditional loan officers can offer pretty
competitive rates, set up, structure and can handle your loan from start
to finish and can make you aware of market opportunities far quicker
and easier than the mortgage company soliciting you in the mail because
simply because rates are low.