Should I refinance with the company that currently has my loan? There are a number of dangers when considering your current lender for a refinance. Generally, they stem from the fact that the lender is in no hurry to give up your current, higher-rate loan.

This is especially true if the refinance was suggested by the lender. Why would a lending company go out of its way to reduce your interest rate? Because it is trying to forestall shopping around on your part. You might find that rates and costs for other companies are more competitive than those offered by your current lender. In that situation, the lender loses the entire loan. If, however, the lender can reduce the rate enough to discourage comparasion shopping (or even sell you a rate that is above the market level but close enough that costs would make refinancing impractical) they are able to lessen their loss.

A lender who is refinancing your existing loan may also drag out the refinance process to keep you at the higher rate for as long as possible. When a lender knows that they have your business and has locked you into a particular rate, why would they rush?

Don't let your lender take advantage of you by being unwilling to shop around. Find out what type of deal they are offering and do some comparasion shopping. You might find that the savings are considerable. If you want to then talk to your existing lender, you'll at least have all of the facts.

There are some advantages to using your existing lender that should also be discussed.

If you have been responsible in your payments, your current lender will have direct access to those records. This can result in lower costs as the company can decide to forgo some of the requirements normally associated with new loans, such as title search, appraisal, credit report, etc. This can save you substantial time and effort.

The above only applies, however, if your loan is not owned by the company from whom you originally bought. This company would not have all of records they require and would have less opportunity to save you costs. In this situation, you may have more luck contacting the original lender. Happily, you can get a total of the costs involved from your current company and consider that when shopping for the best combination of rate, terms and costs.