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Should I refinance with a bank, direct lender or credit union?

Q: What is better for a refinance: credit unions, banks or direct lenders?

A: There's really no one answer. It's like asking, "What's the best store to buy pants?"

Credit unions, banks, direct lenders and others--like online mortgage lenders and mortgage brokers--should be collectively thought of as retailers of a product.

There are a number of factors in play here, and how you personally value and weight each of them will determine what is better for you. Collectively, they are:

  1. Convenience
  2. Service
  3. Price

Convenience: If you value convenience and your existing lender offers a streamlined, no-hassle just-sign-here refinance, this may have the strongest appeal, even if it may not be offered at the best price.

Service: If you more strongly value a service-oriented sit-across-a-desk-and-discuss-your-needs-in-person experience, you might not prefer online arrangements and e-mail communications, even if they might offer you a fantastic price.

Price: You might value a big, well-known national or regional brand over a smaller, lesser or even unknown entity, even in cases where a smaller entity might offer more personalized service or even a better price.

Of course, there can be some advantages and disadvantages of each kind of retailer.

If you're a hard-to-place applicant, a mortgage broker might have more choices and offers available for you compared against a bank or direct lender.

Most mortgages today are sold to Fannie Mae, Freddie Mac or backed by the FHA, so there is great similarity in pricing from place to place for many popular mortgages.

For some kinds of loans, though, especially ARMs or jumbo mortgages, that's not the case, so you will probably want to seek out places which put those loans in portfolio, which would generally be depository institutions--and you should expect to find wide variances in price and availability of credit.

More help from HSH.com

  • Can we do a "cash-in" refinance?

  • How do I remove or add a name to a home loan?

    In general, the only way to remove a name from your mortgage will be to refinance or pay off the debt. This is also true when trying to add names to the mortgage. Lenders will not add nor remove names from such an obligation without the opportunity to ensure that the other borrowers have the ability to pay.
  • I'm trying to refinance a jumbo loan.

  • Is there a ten year refinance mortgage out there?

    Almost any lender that offers a fixed-rate mortgage will offer a 10-year mortgage. Mortgage rates for a 10-year mortgage usually aren't any better than the rates offered for a 15-year mortgage. That said, be sure to shop around to find a competitive rate. Getting a fixed-rate mortgage with a term as short as 10 years will save you a lot of money on interest costs.
  • Living on investment income. Can we refinance our Jumbo mortgage?

    Have you talked to your investment advisor (if you have one)? Some firms will make mortgages for clients with different rules than those you'll find in the open market.

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