Maybe you’re a newly minted homeowner with a flurry of lender offers in the mail. Maybe you’re hoping to pull some much-needed cash out of your mortgage, or use your improved credit score to land a lower interest rate.
Whatever the reason, if you’re considering a refinance, don’t make the decision in isolation. Here are just a few of the resources available, whether you’re seeking a VA-backed refinance or just testing the new-loan waters.
1. Lean on your lender. Most borrowers put in a good amount of legwork selecting the lender for their mortgage. Then, after finding a company that can meet their needs and provide proper service, they sometimes chase a lower rate to refinance the loan ... and it doesn’t always work out.
“Show the offers to your mortgage lender,” recommended Juanita Charles, an Army veteran and Realtor for the area around Kentucky’s Fort Campbell. “That way they can vet the offers for you. Very often, those offers are adjustable rates loans ... that's why the rates are so low. And oftentimes, they are outright lies.”
In some cases, your lender may be willing to match a competitor’s offer. In others, it may be worth researching the new company, and the new offer, and pulling the trigger for a lower rate.
2. Realtor at the ready? Your real estate agent isn’t a loan officer, but chances are if they’re experienced at dealing with VA-loan users, they’ve heard plenty about refinances. They’re also very familiar with the going loan rates, so they can serve as reality checks on too-good-to-be-true offers.
3. Unbiased advice. Research is a must, but web searches likely will land potential borrowers on the websites of lenders. Instead, dig into materials such as the refinancing guide put out by the Federal Reserve Board, or a (shorter) breakdown of refinancing options at USA.gov. Worried your deal might not be on the level? Check out which lenders have run afoul of the Federal Trade Commission.
4. VA support. VA-backed refinance loans come with very specific strings attached. Do your research into VA cash-out refinancing and Interest Rate Reduction Refinance Loan programs to find out what’s allowed and what isn’t; if a lender’s proposal runs afoul of these rules, it’s a major red flag. One example: VA regulations prohibit lenders from advertising the ability to skip a payment in connection with a VA-backed refinance.
Need more loan advice? Check out our VA Loan Center.
Kevin Lilley is the features editor of Military Times.