Should you refinance with your current lender
Refinancing has become a popular issue
in the past couple of years. Interest rates have been
rising, but they are still lower than five years ago.
The fear that rates are going to continue to rise is also
contributing t people refinancing.
One of the biggest questions asked when thinking about
refinancing is; “Should I refinance with my current
lender?”
Mortgage analyst, Craig Romero also poses this question
and offers some possible answers in his mortgage-listings.com
article, “Should I refinance With My Current Lender?”
Romero starts off by stating that you should definitely
get quotes from your lender, but only after you have received
quotes from other lenders.
“Get together
quotes from other lenders and then approach your current
lender and ask them to meet, or even better, beat those
quotes. You can also ask them to waive certain settlement
costs and other fees involved since you are already an
established customer and your lender may have customer
retention programs, but you will need leverage before
you do this.”
Receiving low quotes from other lenders, especially from
your lender’s competitors, will provide you that
much needed leverage. He or she may decide to lower your
interest rate on your current loan, which would eliminate
settlement costs and additional paperwork.
There are also drawbacks to refinancing through your current
lender. Since he or she already has you “locked-in”
and has your money and business, the process of getting
you refinanced may take a lot longer than it would
with a different lender.
Your refinancing may not be as top priority to your current
lender as say a new customer would.
“There
are also times when lenders will not quote you the best
rate they have, but will quote you a rate that is lower
than your current rate. For instance, if you’re
at an eight-percent interest rate currently, your lender
may offer you 6.5 percent because it’s significantly
lower than your current rate. Normally, that would be
great, but if rates are at 5.5 percent, your lender isn’t
doing you any favors.”
Going back to the initial point, having quotes from other
lenders will eliminate this dilemma. You will have control
of the situation and be able to force your lender to beat
the competitor’s rate.
You should treat your current lender like you would any
other lender. Do not have sentiment with your current
lender.
Even though it is nice to do
business with a familiar face, if your current lender
does not offer you the lowest rate and best service, you
should walk away and refinance with a new lender, if you
know you can save money.
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