Are you looking to refinance? It might pay off to start with your current lender
Mortgage refinancing rates today are still near record lows. If you have a good credit rating, low debt level, and a stable job, you might be a good candidate for a new home loan. And if you can significantly reduce the interest rate on your mortgage with this new loan, you could significantly reduce your monthly payments.
Now, you’ll often hear that when it comes to refinancing, it’s best to research the offers of different refinance lenders – and that’s good advice. You never know when a lender might offer you a better deal. But while seeking a refinance quote makes sense, you should always begin your search with your current lender.
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Use an existing relationship to your advantage
There is one key benefit to applying for mortgage refinancing with your current lender: you already have a relationship. If your account is in good standing – that is, you’ve always paid your mortgage on time and aren’t behind on any payments – your current lender will likely want to keep you as a borrower. As such, your existing lender may be more willing to offer you a competitive interest rate on a new home loan, low closing costs, or both.
Of course, it’s always worth shopping around, even if your lender comes back with a good offer. But by talking to your lender first, you’ll get an idea of what terms you might qualify for. And it might help define your expectations.
Also, if you get a more competitive offer from another lender, your lender may be willing to match it. For example, let’s say your lender comes back to you with an interest rate of 2.9% on your refinance, but another lender offers 2.85%. If you make this second offer to your current lender, they may agree to go down to 2.85%. And the same goes for closing costs – your current lender may be more willing to negotiate them or remain competitive with another offer.
Finally, if you are unsure whether you will qualify for mortgage refinance in the first place, your current lender is a good place to start. If your current lender turns you down for a new loan, you might have a similar experience with lenders who don’t know you. And that might inspire you to work on becoming a better candidate for refinancing. You may need to increase your credit score, pay off some existing debt, or work to increase your income.
Remember that shopping around for a refinance offer is always a smart bet. And if you do your rate purchases within the same 14 day period, it shouldn’t affect your credit score too much. Normally, every refinance request you submit will result in a thorough investigation of your credit report, and too many of these could hurt your score. But multiple refinancing requests within the same two weeks will count as one serious request. As such, you can shop around and get all the information you need to make a smart decision, even if you ultimately stick with your existing lender.