Why Refinance With A Mortgage Broker?

If a borrower walks into his local bank to look for a mortgage loan, the bank will not tell this potential customer that their competitor across the street has a slightly better rate.  The customer must do all the legwork if he wants to get the best rate.  Who has the time nowadays to do that?  This is where the mortgage broker can help.  The mortgage broker has visibility across all lenders so he can find the best rates.


As a mortgage broker, I only work with lenders with the best rates and the best closure record.  Lender JoeBob may say they have rock-bottom rates, but if JoeBob shows a consistent failure rate of funding when expected, I will steer my customers elsewhere.  My customers’ time and goodwill are the most important.  When I give a quote to my customers, I must be confident that I could close the loan.


Recently, a couple wanted to refinance their 30-yr fixed loan to another 30-yr fixed.  I asked them what their family plans are in the next 5 years.   They told me that their son will in college by then and their daughter will follow shortly.  I asked them if they could see themselves still living in the same house 5 years from now and they said maybe.  I then asked them about college savings for their children and if they could use a few thousands extra per year.  They said, “Of course!”. 


Rather than refinancing to another 30-yr fixed loan, I suggested to my clients to consider a 5/1 ARM.  A 5/1 ARM is essentially a 30-yr loan but the rate is only fixed for the first 5 years.  After 5 years, the interest rate could change, but the change has a lifetime cap and is usually adjusted twice annually based on a variety of indices.  And of course the borrower has the right to refinance anytime to a new loan should the right opportunity come along.


I then presented 2 loans to them:  the 30-yr fixed rate and payment versus the 5/1 ARM rate and payment.  There was no doubt in my mind that the best loan for them is the 5/1 ARM:  better rate, lower monthly payments and the flexibility to change to a new loan if a lower rate could be found in the near future.  My clients wisely chose the 5/1 ARM and their refinancing is scheduled to close next week.