What To Do If Your Lender Discourages You from Mortgage Refinancing

Is your current lender trying to talk you out of mortgage refinancing? You’d be surprised how many of the so-called top mortgage lenders engage in deceptive practices with their customers. Your first instinct when checking out low refinance rates might be to call your existing lender to lower your payment. Here are several tips on what to do if your current lender is less than forthcoming about refinancing your mortgage.

You’ve Already Got a Great Rate! Why Pay for Mortgage Refinancing?

Don’t be surprised if a loan officer comes back at you with “You’ve already got the lowest interest rate in history, why would you pay for a mortgage refinance?” You might be surprised to find bank representatives arguing with you about the merits of refinancing it today’s economy.

Is the loan officer lying to you? If you’re paying 5% or more on a 30-year mortgage and are not underwater, then yes the loan officer is lying to you. If you’ve got good credit and sufficient equity in your home it’s possible to refinance your 30-year fixed at 3.50 percent. If you want an Adjustable Rate Mortgage you can get below 3.0 percent. Even if you’re only saving a $100 a month on your payment that’s still $1200 a year cash in your pocket. This is a clear benefit to you as a homeowner and has zero benefit for your existing lender.

Do you have an FHA home loan and want a streamline mortgage refinance? Chances are your exiting lender has stopped doing FHA Streamline Refinance as the majority of lenders today have cut this from their offerings.

How to Shop for the Best Refinance Rates

If your current lender is going to be less than helpful when it comes to mortgage refinancing there are better options. This is when it pays to shop around. I always recommend community based credit unions as a starting point for mortgage refinance rate shopping as they tend to have very low origination fees.

Mortgage brokers can be a good resources for getting your mortgage refinancing approved, just be careful how much they want to markup your refinance rates for their commission. One of the most common mortgage mistakes is to focus on getting the lowest refinance rates at the expense of fees. The more you pay for things like the loan origination fee or discount points the more difficult it’s going to be to break even recouping your out-of-pocket expenses.

The test of how good of a deal you’re getting comes from how much you’re paying at closing. If you can’t break even on your lender fees then you’re going to be losing money no matter how low your mortgage refinance rates.