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To refinance a home, the best direct mortgage lenders have the tools and resources to process a new loan. Direct lenders differ from mortgage brokers as they provide the full range of services from underwriting to closing. Additionally, these financial institutions do not need any intermediaries to complete your deal. As a current homeowner, you should be calculating “how much I can borrow,” then carefully looking into direct mortgage lenders. With the lender’s flexibility and customization options, they may be able to offer a much better deal than other banks, brokers or private equity firms. In this post, we’ll explain how to find the best direct mortgage lenders for refinancing your home.
Increase Your Credit Score
Before starting your search for direct refinancing lenders, strengthen your credit. Begin by pulling your credit reports and scores for free. In fact, each of the three major US credit bureaus give you a free report every 12 months. If your credit score is lower than expected, review the reports for delinquent accounts, late payments, or simple reporting errors. Next, resolve any outstanding issues. If possible, pay each credit account down to below 30% of its available credit. Of course, continue making payments on-time as well. A better credit score demonstrates your financial credibility. Therefore, lenders are more likely to work with you and offer increasingly competitive rates. Surely, you can find the best direct lender and lower your rates with a higher credit score.
Improve Home Equity
Secondly, minimize lending risk by improving your home’s equity before refinancing.
An increase in home equity reduces your loan-to-value (LTV) ratio. Of course, lower LTVs demonstrate less risk to refinancing lenders. To increase your home’s equity, make renovations and improvements. While most renovations increase home equity, kitchens and bathrooms provide the highest return. Alternatively, you can pay down more of your mortgage. Paying your mortgage down to this lower level significantly reduces long-term costs and enables better refinancing terms. Absolutely, a higher equity value and lower LTB will make you an attractive customer to direct mortgage lenders.
Determine Refinancing Loan Type
To find several direct lenders, determine the type of refinancing loan required. Start by asking yourself, “when should I refinance mortgage?” For example, rate-and-term refinances often reduce monthly payments, change loan term lengths, or fix the rates of adjustable-rate mortgages. Cash-out refinances behave similarly, except you get a check on closing day for equity you’d like to remove. Additionally, several government entities such as the FHA, VA, and USDA offer direct refinancing loans with highly streamlined processes. This way, refinancing procedures become faster, more efficient, and reduce closing costs. Of course, the types of refinancing loans offered vary between direct lenders. Definitely, narrow down a shortlist of direct lenders by determining the best refinancing loan type for your needs.
Contact Your Bank
Next, contact your bank to determine if they operate as a direct lender. Most borrowers choose to work with institutions they have already done business with. An established relationship can provide larger loan principles and lower interest rates than a brand-new one. Additionally, working with your bank as a direct lender speeds up the refinancing process by cutting out the middleman. Your bank communicates directly with you instead of relaying messages back and forth through an intermediary. Any questions or issues you have get resolved more quickly, as well. Definitely, make contact with direct lenders by asking your bank about their services.
Identifying Additional Direct Lenders
Finally, seek out other direct lenders at additional financial institutions or online. Your specific bank may not be the best fit for your refinancing needs. Therefore, you may need to continue shopping around for the best rates and terms. Start by contacting other large banks in your area. Alternatively, work with an independent online mortgage broker. Of course, identify direct lenders by determining whether they underwrite their products in-house and evaluate your credit. Additionally, consider if the individual taking your applications has a say in the final decision, and whether they serve as a continuous point of contact. Moreover, many direct lenders also designate themselves as consumer direct mortgage companies. Indubitably, highlight the best direct lenders for your refinancing needs by learning to identify them.
Homeowners find direct mortgage lenders for refinancing in a myriad of ways. For example, start by increasing your credit score to maximize chances of working with a lender. Second, reduce your risk and improve your chances of securing a direct refinancing loan by improving home equity. Third, narrow down a shortlist of direct lenders by determining the best refinancing loan type for your needs. Next, make contact with direct lenders by asking your bank about their services. Finally, highlight the best direct lenders for your refinancing needs by learning to identify them. When wondering how to find the best direct mortgage lenders for refinancing, consider the steps described above.