Is It Smart to Refinance With the Same Lender?
It makes sense to see a record number of people looking to refinance their home loans in the past year. With the current 30-year fixed rate barely bouncing from its historic lows, it seems now is the best time to take advantage of lower interest rates.
If you’re a homeowner getting ready to take action, keep reading to discover why you should refinance with the same lender or jump ship to another one.
What’s Your Motivation?
It can be daunting to decide if you should refinance with the same lender or work with another. But before you make any final decisions, it’s best to take a moment and write down your motivations and goals to refi.
For example, you can opt for the cash-out refinance option that’s secured against your home. The benefits will vary with each person, but some of the most common ones include:
● Possible tax advantages
● Safety net for unexpected expenses
● Consolidating high-interest debt
Depending on your motivation to cash out, there could be unexpected consequences. Even though it sounds like the perfect opportunity to invest in that start-up you’ve heard your friends bragging about, without a clear plan, you might end up losing your home.
On the other hand, if you can afford higher monthly payments, then refinancing to a shorter loan term with fixed rates makes sense. Especially when the mortgage lender you speak with offers a more enticing fixed interest rate, thus lowering your overall monthly payments.
Once you’ve drilled down your reasons, the next step is to determine if it’s time to switch lenders or stick with the one you currently work with.
Jump Ship or Refinance With the Same Lender
There’s a common misconception that sticking with your current lender offers the benefit of getting the best rate. However, every refinance lender is restricted to their specific loans and requirements.
While you might end up saving time with your current lender, why shouldn’t you shop around to get the lowest monthly payment option you can?
Closing costs can be a dealbreaker when choosing a mortgage lender to work with. When the lenders quote the prices, you have to consider the rates that come with it. One lender might offer $10,000 with a 3.25% interest rate, while another might provide a closing cost of $5,000 at 3.75%.
In this case, it would make more sense to pay the higher upfront cost. But if the interest rates are the same, clearly, you should go with the one that saves you money upfront and throughout the loan’s lifetime.
How many horrible experiences have you had with companies that offer subpar customer service or business practices? It might be a gamble to work with a new lender, but if your current one is lackluster or has outdated systems, it might be well worth the risk.
But before rushing into a bank or credit union, take the time to decide which type of lender you would prefer. It can make a notable impact on the overall fees and interest you pay throughout the life of the loan.
Putting Thousands Back in Your Pocket
No rules state that you must stay with your current lender. And chances are interest rates won’t stay near their historic lows for much longer.
Refinancing your home loan is a huge decision that Entrust Funding doesn’t take lightly. If you decide that refinancing your home loan will help improve your quality of life, get in touch with one of our refinance specialists, who’ll work tirelessly to ensure you’re getting the best rate and service available.