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The Home Affordable Refinance Program ends in less than 30 days! Are you one of the remaining homeowners eligible for HARP?

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

  • What is a rate and term refinance?

    Homeowners have a variety of reasons for refinancing and each reason can indicate that one refinance option or another makes the most sense.
  • When refinancing at a higher rate makes sense

    Trade your old mortgage for a new, higher-rate version? There are times when it actually makes sense.
  • Should I pay off a mortgage early?

    By making extra principal payments or refinancing your mortgage, you could pay a lot less interest and free yourself from your mortgage ahead of schedule. Here are the pros and cons of retiring your mortgage early.
  • How does a refinance in 2017 affect your taxes?

    After a mortgage refinance, there are some specific "dos" and "don'ts" you need to know prior to filing your income taxes, as well as a few pointers that can help you lower your tax bite.

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