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I want to refinance my mortgage, so I went searching for rates and a typical page on BankRate looks like this:

enter image description here

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?

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    Same way you research any other company you aren't sure you should trust...
    – keshlam
    May 25, 2016 at 4:44
  • @keshlam: well, yes, but what specifics do I need to worry about with a mortgage that is different with a different kind of product with much lower stakes? May 25, 2016 at 14:27

1 Answer 1

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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....

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  • I'm not too worried about bait and switch, because I'll see that up front before signing anything. I'm more concerned about what kinds of issues I may run into after I'm locked into a 20 year relationship with these people. May 26, 2016 at 13:33
  • @JoshuaFrank don't worry about it, in most cases it won't even be 20 weeks.
    – littleadv
    May 27, 2016 at 5:46
  • But what about horror stories where the bank does sleazy things and you can't get anyone on the phone to work it out, and that kind of thing? May 27, 2016 at 16:38
  • @JoshuaFrank do your research, read he reviews
    – littleadv
    May 28, 2016 at 2:45

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