Refinancing with your current lender vs. a new mortgage company

When shopping around to compare refinance rates, don't forget to check with your current mortgage lender. Depending upon your situation there may be some advantages to refinancing with your lender. Here are some reasons it may make sense to stick with your current mortgage loan company.

1. Your mortgage lender may be able to waive some of the closing costs associated with a refinance, such as fees for credit reports or processing documents. For instance, some mortgage lenders have deals allowing borrowers to pay no or low closing costs to refinance. Keep in mind that a low-closing cost deal may carry a higher refinance rate than if you paid all the closing costs. It's important to have your mortgage lender or a housing counselor go through all the numbers to determine if doing a low-cost refinance makes sense.
2. You may be able to roll over funds in your existing escrow account into the new mortgage loan. Your escrow account usually takes care of homeowners insurance premiums and property tax payments. If you refinance with a new mortgage lender you may have to come up with a year's worth of insurance premiums at closing. You also may be responsible for paying any outstanding or delinquent property taxes at closing.

Choosing a new mortgage lender

Keep in mind that there are times when refinancing with your mortgage lender may not be the best choice. Among those reasons is that it could longer than refinancing with a new company--sometimes much longer. Your mortgage lender may be slow with processing paperwork because there isn't much incentive to allow you to refinance--once you refinance, you'll be paying less, after all.

Also, your mortgage lender may not offer you the best mortgage rates. You may be offered one rate even though you actually qualify for a better rate. A new mortgage lender may really hustle to get your business. It may be willing to waive certain fees or even offer some type of incentive for closing on a refinance by a certain date.

Compare mortgage quotes

Spend some time shopping around the best mortgage loan package. Even if you are in a rush to take advantage of current mortgages rates, it's worth it to check out all your options to find the best deal. Get several mortgage quotes so you can compare all the fees and closing costs. Make sure you are comparing apples to apples to fully evaluate deals offered.