Many homeowners have taken advantage of the record low interest rates to refinance their mortgages, with many simply refinancing through their current lender because of how convenient it is. However, even though they may be getting a lower interest rate than before, they may be missing out on even lower deals. It pays to shop around for the best refinancing rate possible, even though it may mean working with a new lender.
There are a number of reasons this is true. First of all, the current lender knows what the borrower's interest rate is. They may offer a rate that is below the borrower's current rate yet still higher than the current market rate. Without knowing what the current rates are, the homeowner may agree to this rate even though it is not the best they could get.
For this reason, homeowners are actually encouraged to talk to their current mortgage company last. The Federal Reserve urges those who want to refinance to get rates from several other lenders in order to get a better idea of the current market rate. With this information, they are better equipped to work with their current lender. By letting the lender know they have other options, the homeowner may also get a much better rate from their current mortgage holder.
There may be times when the borrower's current lender does actually give them a very good rate right away. Some also offer lender credits that waive certain fees, but it never hurts to investigate all your options.
Moneytips can help you refinance your existing home loan.