subject: Why Refinancing With Your Current Lender May Not Be Your Best Choice [print this page] Author: Rob Blake Author: Rob Blake
One question that weighs heavily on some people's minds when refinancing is "Should I use my current lender?". While this sometimes could be the case, there are factors that could mean this will not be the best choice you can make. Shopping around for the best deal as you would when shopping for anything else could result in finding a lender other than your current mortgage holder that can present a better option.
Shopping Around Can Save You Money
There are many mortgage companies out there right now wanting your business. While you may have gotten a good deal from your current lender, you may be able to find another lender that can make you a better deal on your refinance. One thing to consider is the interest rate. By shopping around and getting rates from other sources, you may find that refinancing through a different lender could result in getting an interest rate that is two or three percent lower than what your current lender can offer you. This can save you a lot of money over the life of your mortgage.
You may also find that your current lender will have closing costs and points that could make refinancing with them less than the best option. There are many mortgage companies out there right now who will offer refinancing deals that will not include any fees. This means they will pay for things such as your appraisal, title search, and other related expenses. You can also find lenders that are willing to refinance your mortgage without any points included. This could end up saving you thousands of dollars, and in turn give you the lowest monthly payment that you will find.
Why Your Current Lender Is Not Always The Best Option
While your current lender may treat you very well, you also have to keep in mind that mortgage companies are in business to make money. Every business, no matter what industry they are in, is going to try to make themselves as profitable as possible. When you go to your current lender, you may find that getting approved may not be as easy as you thought it would be. You may also find that they may want to charge you more fees than another refinancing source, because they don't want to lose money when refinancing your account.
This is especially true on mortgages that are less than 2 years old. If a customer is paying 8 percent on a mortgage now, and then wants to refinance at 5 percent, this is going to mean less profit for the lender over the term of the loan. This is why they may not be willing to approve you for a refinance. In the event they do approve the refinance, it is likely they may add in enough points to cover some or all of the money they will lose by refinancing your mortgage.
Your current lender may not be the best refinancing option for you for a number of reasons. Finding the lowest rate with a company that can also offer you a savings on closing costs may mean your current lender will not be the best choice for you. With the abundance of mortgage companies available that would want to have you as a customer, you may find that you can save a lot more money by using someone other than your current lender.About the Author:
