I want to refinance my mortgage, so I went searching for rates and a typical page on BankRate looks like this:
These rates are a good half a percent less than what's offered by the major banks, but I've never heard of any of these lenders and they might be unreliable or outright scams.
So how would I know if one of these banks is a company I dare do business with for something as critical as a mortgage?
Most of these are either brokers and you're actually getting a mortgage from some other bank that doesn't want to invest in its own retail operations, or fronts for private investors, REIT funds, etc. In many cases, these companies issue a mortgage and immediately sell it to some other bank - profiting from the origination charges and points you paid them, and shifting the risk to someone else.
They are (probably...) legit, in most (if not all) States they must be licensed and regulated, but the devil is in the details: the rates may be low, but the fine print is such that you would probably never qualify to the low rate you see and end up either getting a higher rate, or paying points to get to the rate you want. Classic bait and switch.
But, in some cases, you may really end up with an awesome rate....
