Refinance Now! ? Ensure an Honest Mortgage Lender
Everyone expects their mortgage lenders to check up on them. But how many borrowers investigate their mortgage lenders? The cases in Florida show that even people convicted of violent felonies or crimes like money laundering and fraud can worm their way into mortgage lending. You don't want felonious financial fraudsters messing with your refinance mortgage or new home loan, do you? No worries--just use these top tips to make sure that your refinance lenders are on the up-and-up.
Tip #1: Don't Be Paranoid
Even if you do nothing, the odds are good that you'll get an honest mortgage lender or broker. If you check out the FBI's Web site, you'll see that your lender has more reason to be afraid than you do--the vast majority of mortgage fraud at the federal level was committed by borrowers against lenders. Real estate experts concur:guru Robert Bruss and industry news site Realty Times both state that, while there are bad guys out there, in most cases you'll end up with an honest mortgage lender.
Tip #2: But Don't Be Stupid
Doing nothing is easy, but doing something isn't that hard. And identity theft is such a buzz kill. So smart shoppers (that's you, right?) take a little time and vet their lenders before they refinance a mortgage or buy a new home.
Tip #3: See How Tough Your State Is
Some states are vigilant about who gets into mortgage lending and who doesn't: they conduct background checks and require that loan officers take classes, including ethics training, and pass exams before they can be licensed. Continuing education is also likely to be required every year. Other states license anyone with a heartbeat who can pay the fee. TrainingPro provides loan officer licensing training and lists state-by-state requirements for mortgage loan officers and brokers. If you live in a "heartbeat and fee" state, know that a license means very little and that you will probably want to dig deeper.
Tip #4: Check Your Lender's Licensing Status
Most states offer lender databases, which you can find online. You can check these databases to determine if your lender is licensed to do business with you, and to see if there are pending investigations, code violations, or consumer complaints. Your local Better Business Bureau may also have information on your mortgage lender.
Tip #5: Get Quotes from Several Mortgage Lenders
This is the most reliable way of making sure that you are being offered a fair and realistic interest rate. Making lenders compete flushes out the ones who routinely overprice mortgages or steer borrowers into more expensive loans. You'll also be able to spot abnormally low rates; just know that until you have an interest rate locked, nothing these low-ballers tell you represents a commitment to refinance your mortgage.
Tip #6: READ Your Disclosures (Your Eyes Won't Fall Out)
Anything in writing trumps the word of a loan officer or mortgage broker. Starting on January 1 this year, disclosures became easy to interpret--everything you need is front and center, with no burrowing through piles of riders and boilerplate to find nasty fine-print boogers. In addition, whatever terms are on that final disclosure (usually received when you lock in your interest rate) are the terms you close with, within certain tolerances. Ugly surprises at closing are now illegal.
Tip #7: Use the Right of Rescission
Mortgage refinances on primary residences don't close until three business days after you sign your final documents. You have that time to back out of the loan if you get buyer's remorse--just do it in writing. Use that time to make sure your refinance loan is what you expected.
Tip #8: Be Nice to Your Lender
A good mortgage professional is someone you can trust with a large financial transaction. You'll discuss personal stuff--money, credit, life plans--and take advice from this person. You'll expect a high level of service--promptly returned calls, careful explanations, expert guidance--and hopefully together you'll celebrate the successful conclusion of a profitable mortgage refinance.