Whether you have owned your home for quite some time or you’ve just recently purchased your home, you might find its time to consider a refinance on your loan to take advantage of lower interest rates.
After deciding to refinance, the next decision is... do you refinance with the same lender you already have, or do you find a new lender?
While you might think it will be easier and faster to go with the same lender you currently have, you should take the time to compare their offer with other lenders and make sure you are moving forward with the best deal all around.
Before you begin contacting your existing lender or any other lenders for quotes, there is information you want to have on hand in preparation.
- Current mortgage payment
- Current interest rate
- Property taxes
- Insurance payments
- Date your current mortgage was started
- Credit Score (note: if possible, provide an estimated score then have the lender run your credit for actual score. Since they will run your credit anyway, you do not want too many “hits” on your credit at the same time as it will lower your score)
- Appraisal of how much your house is worth. You might be able to acquire this by having the agent you originally worked with run a comparative market analysis. This will save money as the alternative if to pay for an appraisal.
Next, determine if you were satisfied with your existing lender. If you didn’t have a good experience with them, if they missed deadlines or provided subpar customer service, you do not even have to consider them for your refinance.
Once you’ve made that decision, it time to call around and ask for quotes. As rates fluctuate day to day, be sure you are getting quotes on the same day.
If you are considering using your existing lender, its worth taking the quotes you receive from other lenders and bringing them to your existing lender. Often times your current lender will be able to offer allowances by refinancing with them, such as waiving an appraisal inspection. They might also be able to streamline the process, giving you a quicker closing date than new lenders, since they have worked with you in the past and have your basic information already.
Once you have all of your quotes in hand, take the time to review each one carefully. Make sure you are comparing the fees associated with each one and understand what each fee means. Origination fees might be listed on a quote from one lender, however another lender might list that same fee as an underwriting fee or processing fee. Make sure you know the terms of each quote, as well as the closing costs associated with each loan and the interest rates of each.
Without taking the time to get quotes from various lenders, you really will not be able to know if you are the getting the best deal possible. Many people don’t bother speaking with various lenders because they find the whole ordeal overwhelming and time consuming, however when you do take your time and compare rates and incentives before making your decision, you will find you could save a substantial amount of money, leaving cash in your own bank account at the end of each month.