Should you refinance with your current lender?
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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.
