Comparing lenders

Whenever you are considering refinancing loans, the easiest place to start is with the lender who arranged your first mortgage. Since you are already familiar with the company and their products, you already have one advantage. Furthermore, the lender might offer special incentives (fee waivers or other discounts) to prevent you from going somewhere else. Finally, you might not be required to resubmit the lengthy paperwork that refinancing often requires.

That said, you should also research refinancing loans with other lenders, too. Your current lender may not offer the best deal. For that reason, you should give yourself some time to shop around. Keep in mind that you are not obligated to get the same type of loan as your original mortgage. For instance, you might decide to replace your balloon mortgage with a fixed-rate mortgage.

It is natural for borrowers who are refinancing loans to focus on interest rates. It is easy to see why this happens, since so often the very reason they are seeking refinance is lowered interest rates. Still, make sure that you are considering the whole picture as you compare loans across lenders. When you are comparing interest rates, be sure that they feature comparable points. An even better idea may be to look beyond the interest rate. APRs can be a good tool for comparing loans across lenders.

As you look for the most attractive option for refinancing loans, start compiling the necessary documentation. Remember how you needed all of those bank statements and tax forms the first time around? You’re probably going to need them again.