Big banks are the worst places for mortgages and refinances

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Big banks are the worst places for mortgages and refinances
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Do you know that it’s a rip to get a mortgage or refinance from a giant monster mega-bank?

Giant monster mega-banks are the full price people, like the Nordstrom or Saks in terms of pricing, but not in terms of service!

Credit unions and mortgage brokers challenge the banks

The banks offer the worst of all possible worlds: Mediocre to terrible service, high prices, with potentially higher interest rates and absolutely much higher fees.

So people have migrated away from them. One in 4 mortgages now being made is by nontraditional lenders like online lenders. For a refinance, online lenders are great. Though I don’t recommend them when you’re purchasing a house; there are enough ‘what ifs’ in home buying to begin with that you want to deal with a person locally. I recommend a mortgage broker instead.

The other thing to look at when buying a home is a credit union. Credit unions are becoming a bigger part of the home mortgage market. They excel for non-traditional loans like a 10 year refis or 7 year refis. They will write you a shorter-term mortgage at incredibly low rates with very low fees.

So I know the brands are so prominent with the giant monster mega-banks. But I can tell you with a mortgage, don’t even think about it!

SoFi offers new option without all the paperwork hassle

SoFi.com is a company that began with P2P lending, branched out into student loans, and now they’ve moved into mortgages in a half dozen states including California, Washington, Texas, Pennsylvania, New Jersey and North Carolina.

What makes them significant is the amount of documentation they require is tiny compared to what you normally have to do. The reality is those getting a mortgage or a refinance are beaten down by endless documents requirements from the lenders. There’s been a backlash to the point that people abandon a refinance that could save them hundreds a month because they can’t stand all the hassle.

SoFi’s underwriting process takes into account your social media standing and other non-traditional metrics to make a determination about you. They offer, as they say, ‘less headache’ with ‘no need to hunt down old tax returns…or provide additional letters.’

They offer rapid closings. The whole process is designed to be easier.

The question later will be did they use good enough underwriting standards or are they going to have a higher rate of defaults? Only time will tell.

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Clark Howard About the author:
Clark Howard is a consumer expert whose goal is to help you keep more of the money you make. His national radio show and website show you ways to put more money in your pocket, with advice you can trust. More about Clark
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