Posted on November 9th, 2020
A lot of homeowners are looking to refinance their mortgages at the moment. That’s abundantly clear based on the record volume of refis expected this year, per the MBA.
And while mortgage rates are in record low territory, thus making the decision to refinance an easy one for most, it still pays to shop around.
I think we all have a tendency to care less about prices when something is on sale, but there’s no reason you shouldn’t strive for even better, regardless of how cheap something is.
Look Beyond Your Current Mortgage Lender
- New technology is making it easier for lenders to improve borrower retention rates
- This means using the same lender for life even if their interest rates aren’t the lowest
- But like most things loyalty often doesn’t pay when it comes to a home loan
- So take the time to shop around and negotiate like you would anything else
Thanks to emerging technology, it has become easier for mortgage lenders, mortgage brokers, and loan officers to improve their customer retention.
This means if and when a past customer looks to refinance their home loan or purchase a new home, they might be notified if they pay for such services.
There are companies that can keep an eye on your data over time to see if you’ve applied for a home loan elsewhere, if your home equity has increased, or if your debt load has gone up.
The same goes for your credit score, which if it’s improved enough, may prompt a call or email from a lender or broker you worked with in the past.
While this in and of itself isn’t necessarily a bad thing (sure, data collection is getting a little aggressive), it’s how you react to the sales pitch if and when it comes your way.
Ultimately, if you receive an inbound call or email regarding a mortgage refinance, HELOC inquiry, or even a referral from a friend or family member, don’t stop there.
They are just one of the many individuals/companies you should contact and consider before finalizing your home loan decision.
What If You Receive a Mortgage Mailer?
- Consider an inbound solicitation a starting point if you’re considering a refinance
- Don’t simply call the individual/company back and call it a day because they can offer a low rate
- There are hundreds of mortgage companies out there and competition is fierce
- Your mortgage will be paid for decades so every little bit matters if you care about saving money
I get mortgage solicitations all the time – and they’re often from a broker, lender, or loan servicer I worked with in the past.
They’re certainly appealing, don’t me wrong. Who doesn’t want to save potentially hundreds a month for simply redoing their home loan, especially if it’s from a trusted source?
But why stop at that mailer? Why not use that as a stepping stone to reach out to other lenders and get additional pricing and offers, then make your decision?
When we’re talking about something as important as a mortgage, which you pay each month for decades, the price you pay matters.
And even a small difference of say an eighth of a percent can equate to thousands of dollars over the life of the loan term.
As noted, companies are getting smarter every day when it comes to customer retention. Unfortunately, a customer retained is likely to miss out on even bigger savings elsewhere.
Don’t simply take the path of least resistance. Put in the time and you should save money.
This is even more critical for low-credit score borrowers, as a wider range of mortgage rates are quoted for those with lower scores.
But all homeowners can benefit from multiple mortgage quotes, as pointed out in a survey from Freddie Mac.
Those who gather just one additional mortgage quote can save between $966 and $2,086 over the life of the home loan, while those who take the time to get 5+ can save nearly $3,000.
So while your old company may make it easy for you to refi, you might be better served looking someplace else.
Read more: Mortgage Rate Shopping: 10 Tips to Get a Better Deal
About the Author: Colin Robertson
Before creating this blog, Colin worked as an account executive for a wholesale mortgage lender in Los Angeles. He has been writing passionately about mortgages for nearly 15 years.