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Bob Schwartz
San Diego
real estate broker
Certified
Residential Specialist
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Comparison Shopping When Re-Financing
Homeowners who are re-financing their home for the first or even the second
or third time ought to carefully research all of the possible options to
ensure the best possible interest rate and terms are secured. Homeowners are
sometimes lazy when it comes to re-financing. There may a large drop in
interest rates or a change in the financial situation which warrants a
re-finance. Although the homeowner may be aware that a re-finance is
warranted, the homeowner may not be aware that it sometimes takes a great
deal of work to find the best possible rates and terms.
Homeowners are often disposed to re-finance with the same lender who granted
the first mortgage or with the same lender who handled prior re-finances.
The theory behind this reasoning is along the same lines as, “If it ain’t
broke, don’t fix it.” These homeowners figure their current mortgage is
adequate and they are happy with the current lender so there is no need to
investigate further options. However, this cavalier attitude can be quite
costly for the homeowners.
When you look for your real estate appraiser, you should look for someone
who comes highly recommended. You can ask family and friends for their
opinions, or search local papers, even the Internet. If you take your time
and search for the best real estate appraiser that you can find – you’ll
normally get an appraisal that is right on target.
Homeowners who are considering re-financing their home should contact
numerous lenders and obtain rate quotes from each of them. When soliciting
quotes the homeowners should consider all of their available options but
should limit these options to established lender. While a newer lender may
be offering fantastic rates and loan terms it is considered quite risky to
go with this type of lender as opposed to a more established lender.
Homeowners who wish to further explore smaller lenders who do not have an
reputable history should proceed with caution. Unless the lender has trusted
friends or family members who are willing to vouch for the lender, the
homeowner should investigate these smaller lenders carefully. Visiting a
website address is not the best way to ensure credibility. Designing a
professional looking website is a fairly simple process. Most website
designers could design and upload such a website in less than a day.
Friendly Competition
When comparison shopping for the most promising rates, homeowners should
make it known that they are shopping around for rate quotes and are not
making a decision immediately. Lenders who know they have some competition
may be more likely to offer a lower interest rate than they would if they
did not think the homeowner was considering other options. Although this may
not seem quite fair to the lender, the business of re-financing is a
competitive business. Just like a plumber might offer his most competitive
rate if he knows the homeowner is seeking estimates from a number of
different plumbers, lenders are apt to do the same. They make their money
from homeowners and having a homeowner re-finance their mortgage does not
help them out at all financially.
Some lenders may believe the homeowner is faking and may not offer the best
rate initially. However, if the homeowner rejects the offer and states they
have a better offer with another lender, the first lender may be enticed to
offer an even lower interest rate just to see if they can sway the
homeowners. While cost is certainly important, it is not the only factor to
consider. Some homeowners might re-finance with a lender who offers slightly
higher rates if the homeowner feels as though this lender is more responsive
to his needs.
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