Research the current interest rates
Before you talk to a lender or broker, you should research interest rates. They change daily. Know what the current rates are and what you can expect. Each lender will have different rate offers, but they shouldn’t vary by much. As long as you know the proper range, you can know which offers to consider.
Read the Good Faith Estimates
If you hire a mortgage broker, make sure to read the Good Faith Estimates carefully to see how much they are charging you. They often have a few ways to earn commission. Check to see if the broker is charging you upfront (usually 1-2% of the loan). Then see if they are also getting paid by the lender (in order for this to happen, you will have a prepayment penalty attached and will pay a higher interest rate). And finally look for any other extra fees (like an administration fee, application fee, processing fee, etc.).
Negotiate your broker’s commission
A broker’s commission is always negotiable, but you must make sure you know what their fee is. Some borrowers are so eager to get into a home that they don’t even ask what the broker charges. Some brokers might try to charge you 3% upfront, get 3% from the lender and then tack on other charges on top of that! Remember that you’re their customer and have every right to ask questions.
Watch the closing costs
There is no way around paying some closing costs on any refinance. These fees will probably come out of the equity of your home. It can seem like “free” money, but you need to consider them as if you were paying them out of your bank account. After all it’s your money you’re spending.
No cost loans
Watch out for no cost loans. There are always costs to any lender or broker on every loan and if they are offering to waive these fees for you, they will resurface in a different form. Someone has to pay these costs! Perhaps your principal will increase or your interest rate will be higher. Either way, make sure to compare all aspects of a loan before selecting one.