If you want to refinance your home, you will likely want to switch to a new mortgage provider in order to take advantage of reduced rates and more lenient terms. Sometimes, however, your current mortgage lender will offer you the best rates in order to keep your business and because he or she already has a working relationship with you.
The following tips will help you determine whether or not you should switch to a new bank or lender when refinancing.
This is the most basic step. Do some math. Find several local lenders, as many as you can handle, and start comparing the loan packages they offer. Compare mortgage rates and loan terms. You need to have a firm idea of what you can get elsewhere in the marketplace. Don't talk to your current lender until you've gained this knowledge.
Comparing lenders isn't enough. You need to determine what you can actually get from those lenders. What rates will your credit score qualify you for? What percentage of your home equity will you be able to take out as cash? It won't do you any good to blow off your current lender and go in search of another only to find out that the deals aren't as good.
This is the final step. Now that you've obtained a working knowledge of the marketplace and have solidified your options, speak to your current lender and find out what he or she is willing to offer. Save this step for last so that you can show your current lender the deals you'll be able to get elsewhere. This will convince him or her to let you refinance or else lose your business.
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