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How to Compare Refinance Proposals and Select the Right One for You

How to Compare Refinance Proposals and Select the Right One for You

  • Shopping for Your Refinance
  • You should treat the refinancing process like you would any other major purchase, such as buying a car.  Shop around, compare refinancing proposals from multiple lenders and select the best proposal.

  • Great Mortgage IdeaIt takes extra time to compare and negotiate mortgage proposals but spending an extra hour or two can save you thousands of dollars. For example, on a $300,000 30 year fixed rate mortgage, reducing your interest rate by just .125% will save you almost $8,000 in interest expense over the life of your mortgage
  • Follow the steps below to negotiate the best terms for your mortgage:

    • Gather refinancing proposals from at least four lenders, including one mortgage broker.  There are different types of lenders such as banks, mortgage brokers, mortgage bankers and credit unions and they are ALL competing for your refinancing business.  Some mortgage lenders such as banks, mortgage bankers and credit unions are direct lenders, which means they lend you money directly for your mortgage, potentially allowing them to offer you a lower interest rate.  Other lenders such as mortgage brokers do not fund mortgages directly but instead act as a personal mortgage shopper for borrowers and compare rates and fees from multiple funding lenders to find you the best terms for your refinancing, so you benefit from lender competition.  Gathering proposals from at least four lenders will ensure that you have a range of options, which puts you in a stronger position when you negotiate your refinancing.
  • Great Mortgage IdeaThe table below shows interest rates and costs for lenders in your area. Contact multiple lenders to make sure you receive the best terms for your refinance
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    Rate Details*
    Loan Program:  
    Monthly Payment:  
    APR:  
    Rate:  
    Points  More Info:
    Points: Fees you are willing to pay in order to get a lower interest rate. The number of points refers to the percentage of the loan amount that you would pay. For example, "2 points" means a charge of 2% of the loan amount.
     
    Total Lender Fees:  
    Loan type:  
    Property Value:  
    Loan to Value:  
    Credit Rating:  
    Date Submitted:  
    Monthly Housing Payments
    P & I More Info
    Principal & Interest: A periodic payment, usually paid monthly, that includes the interest charges for the period plus an amount applied to the reduction of the principal balance.
    Mortgage Insurance More Info
    Mortgage Insurance: The monthly cost for a policy that protects the lender in case you’re unable to repay the full amount of the loan. It is typically required for loans that have a loan-to-value ratio between 80% to 100%.
    (Estimated)
    Property Tax More Info
    Property Tax: (Also called "Real Estate Tax.") Property taxes are government assessments on real estate property. With mortgage financing, the local, county or state tax assessment on real estate property is considered part of the monthly housing obligation and typically collected and set aside by the lender ...
    (Estimated)
    Homeowner Insurance More Info
    Homeowner Insurance: or also commonly called hazard insurance, is the type of property insurance that covers private homes. It is an insurance policy that combines various personal insurance protections, which can include losses occurring to one’s home, its contents, loss of its use, or loss of other personal possessions of the homeowner, as well as liability insurance for accidents that may happen at the home or at the hands of the homeowner within the policy territory.lender ...
    (Estimated)
    Homeowner Association Fee More Info
    Homeowner Association fee: (HOA) fees are funds that are collected from homeowners in a condominium complex to obtain the income needed to pay (typically) for master insurance, exterior and interior (as appropriate) maintenance, landscaping, water, sewer, and garbage costs.
    (If Any)
    Total Monthly Housing Payments
    Lender Fees
    Points More Info
    Points Fees you are willing to pay in order to get a lower interest rate. The number of points refers to the percentage of the loan amount that you would pay. For example, "2 points" means a charge of 2% of the loan amount.
    Origination Fee More Info
    Origination Charge: A loan origination charge is a fee charged by the lender for evaluating, processing, and closing the loan.
    Credit Report Fee More Info
    Credit Report Fee: Fee charged to obtain an applicant’s credit history prepared by one or all of the three major credit bureaus. Used by lender to determine the borrower’s creditworthiness.
    Tax Service Fee More Info
    Tax Service Fee: A fee charged by the lender to cover the cost of retaining a tax service agency. These agencies monitor the property tax payments on the property and report the results to the lender.
    Processing Fee More Info
    Processing Fee: A processing fee is a charge by the lender for clerical items associated with the loan. Examples of processing include loan set up, organization of loan conditions for underwriting, and preparing required disclosures for the borrower.
    Underwriting Fee More Info
    Underwriting Fee: A fee charged by the lender to verify information on the loan application, authenticate the property’s value, and perform a risk analysis on the overall loan package.
    Wire Transfer Fee More Info
    Wire Transfer Fee: In most cases lenders wire funds to escrow companies to fund a loan. Commercial banks that perform this function will charge the lender so the fee is generally passed on to the borrower.
    (If Any)
    FHA Upfront Premium More Info
    FHA Upfront Premium: A fee paid in cash at the close of escrow or more commonly it is financed into the loan. These premiums are pooled together by the FHA and are used to insure the risk of borrower default on FHA loans. FHA upfront premiums are prorated over a five year period, meaning should the homeowner refinance or sell during the first five years of the loan, they are entitled to a partial refund of the FHA upfront premium paid at loan inception.
    (If any)
    VA funding Fee (If any)
    Flood Fee
    Other Fees More Info

    Other fees could be either additional Administrative Fees that a lender charges or it could be a Flat Fee to cover all lender charges such as: (Origination Fees, Points, Underwriting and Processing Fees, Credit Reports and Tax Service Fees)

    The flat fee does not include prepaid items and third party costs such as appraisal fees, recording fees, prepaid interest, property & transfer taxes, homeowners insurance, borrower’s attorney’s fees, private mortgage insurance premiums (if applicable), survey costs, title insurance and related services.

    Total Lender Fees
    *Actual rates and other information may vary. Sponsored results shown only include participating lenders. The information you enter on this page will only be shared with lenders you choose to contact, either by calling the phone number or requesting a quote.
    Compare Refinance Mortgage Rates
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    Data provided by Informa Research Services. Payments do not include amounts for taxes and insurance premiums. The actual payment obligation will be greater if taxes and insurance are included. Click here for more information on rates and product details.
    • Request a Loan Estimate and Lender Fees Worksheet from the lenders you contact.  According to federal law, the lender must provide the borrower a Loan Estimate, that outlines a good faith estimate of the key terms of the mortgage including interest rate, Annual Percentage Rate (APR), closing costs and mortgage features within three business days of the borrower submitting a loan application.  If a lender refuses to provide an Loan Estimate, this is a red flag and you should contact other lenders.  The Loan Estimate is a standard document that will be the same across all lenders – this allows you to more easily compare refinance proposals from various lenders.  The Lender Fees Worksheet provides a detailed breakdown of all the costs and expenses associated with a mortgage refinancing including fees charged by lenders and other third parties.  By law, the lender is not required to provide you with the worksheet, but will likely provide it to you if you ask.  Borrowers should use the information on interest rates and refinancing costs presented in these documents to compare refinancing proposals.  Please note that a lender cannot charge you to submit a mortgage application or to provide the Loan Estimate and Lender Fees Worksheet.
    • Compare refinancing proposals.  When comparing mortgage proposals, we recommend that you focus on two key items that have the most impact on your up-front and long-term mortgage costs: 1) interest rate, and 2) closing costs.  You can use the Loan Estimate and Lender Fees Worksheet to help with the comparison.  You can find the interest rate at the top of page one of the Loan Estimate and the estimated closing costs at the bottom of page one.  Page two of the Loan Estimate provides a detailed, item-by-item breakdown of the all the mortgage closing cost items you are required to pay.  You should also use the Annual Percentage Rate (APR) on the top of page three of the Loan Estimate to quickly compare and identify excessive closing costs.   In short, the APR represents what your interest rate would be if it included all up-front lender and closing costs so it is a way to use one figure to compare both the interest rate and closing costs for a mortgage.  If the APR is much higher than your interest rate then you know that the closing costs are relatively high and you may want to negotiate lower costs or change lenders. Additionally, if you have proposals from two lenders that are offering the same interest rate but one APR is higher than the other, then you know the lender with the higher APR is charging higher fees.  The table below shows you exactly where on the Loan Estimate you can find the interest rate, closing costs and APR.
    • Negotiate the best terms.  Some lenders may offer a lower interest rate with higher fees while other lenders may offer a higher interest rate with lower fees.  Use this information to your advantage to negotiate the lowest interest rate and fees for your refinancing by asking a lender to match the interest rate or fees offered by another lender.  Additionally, you can use the Lender Fees Worksheet to perform a more detailed review and comparison of refinancing closing costs.  For example, one lender may charge an appraisal fee of $600 while another lender may only charge $500.  Use information from the Lender Fees Worksheet to negotiate specific cost items and reduce your overall refinancing closing costs.
  • Where to Find Information to Compare Mortgage Proposals
  • The table below shows you where on the Loan Estimate you can find 1) the interest rate, 2) estimated closing costs, and 3) the APR.  Click on the rectangle icons to see where each figure is located on the Loan Estimate. When you compare mortgage proposals keep in mind that interest rates and closing costs vary by mortgage program.  For example, a fixed rate mortgage typically has a higher interest rate than an adjustable rate mortgage.  In some cases borrowers consider different types and lengths of mortgages so be sure you are comparing similar programs when selecting a a lender for your refinance.

  • CalculatorInput the information from multiple Loan Estimates into our MORTGAGE COMPARISON CALCULATOR to compare mortgages and select the one that is right for you
Key mortgage costs items
  • Interest Rate
  • Loan
    Estimate (LE)
    • One of the first items on the LE and easy to compare across lenders because it is a single figure
  • Estimated Closing Costs
  • Loan
    Estimate (LE)
    • Total of all closing costs included lender, appraisal and title fees as well as any taxes, prepaids and escrow payments
    • Found at the bottom of page one of the LE
  • Annual Percentage Rate (APR)
  • Loan
    Estimate (LE)
    • The APR represents what your interest rate would be if it included all up-front lender and closing costs
    • Use the APR to compare mortgage proposals from multiple lenders
    • If you have proposals from two lenders that are offering the same interest rate but one APR is higher than the other, then you know the lender with the higher APR is charging higher closing costs
    • Found at the top of page three of the LE
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