Refinancing With Your Current Lender: Is It Your Best Option?

A common question people are confronted with when considering refinancing is "Should I use my current lender?".The only real way to answer this question is by shopping around and finding the best offer. Like any other thing you may consider shopping around for, only by finding the best deal available can you determine if refinancing through your current lender is the best option available to you.

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 best refinancing option may not end up being your current lender for a number of reasons. Shopping around gives you the opportunity to find the best rate and the lowest closing costs that will present the best refinancing option for you. There are a lot of mortgage companies looking for new business that may be able to present you with a deal that will make your current lender's offer one that will not represent the best deal you can find.

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