Searching for a competitive mortgage rate and terms can certainly be challenging in today’s lending world. Mortgage rates are presently at historic lows and there is even greater opportunity to aggressively pay down your mortgage balance. So where do you go to secure the best possible interest rate on that new mortgage loan?
Well…banks create a perception to their customers that because they are servicing the customer’s home loan already the process of refinancing will be made easier by just working directly with them. This is nothing more than a clever sales pitch.
What do you mean refinancing with my current lender is not easier?
It also does not benefit them. Think about it for a second. Let’s say you are paying 5.5% on your 30 year fixed-rate mortgage and your balance is somewhere around $200,000. This means your bank is making roughly $11,000 per year off of the money they lent you. You have an opportunity to refinance to a new 30 year fixed-rate mortgage for $200,000 at 4.375%.
If you go back to your bank and complete a refinance with them they lose money. The reason for this is because they are being “paid off” and they’re no longer going to be collecting higher interest rate payments from you. This means they lose and you win.
If you refinance with your current lender they will still need all forms of documentation so it is not easier.
Make no mistake your bank does not want to lose your business. Your bank will help you do the new refinance, but only because they want to retain you as a customer and offer you checking accounts, credit cards and other ancillary banking services. They know that you’re going to refinance the loan anyway so they figure they might as well to it themselves.
Just because you are making your payment to them every month does not make refinancing with them any easier. Why is this the case? It’s because all new mortgage loans being originated today must have two years of federal income tax returns, two years of w’2′s with a full financial package including credit and assets. I can promise you your loan servicier does not have all of your financial documentation readily available at their fingertips. So therefore the process with them is the same as it would be if you went elsewhere.
Refinance your home mortgage loan with a different lender for the best results.
Since you’ll need to be gather a full list of financial documentation here is a link to the home loan documentation checklist that you can take to use with any lender of your choice.
Get a second opinion. If you are presently working with your bank and live in Santa Rosa, Petaluma, Windsor, Healdsburg or any other Sonoma County city and are looking to refinance give me a call Scott Sheldon at 707-217-4000. I can show you why refinancing with your current lender might end up costing you more money and time.