This tip is for investors or home owners alike. A while back, I was having a conversation with the Vice President of a local bank that I have done business with in the past, looking to see what he could do to refinance a mortgage on an investment property. Now, I should have thought about this myself, but I didn’t, and on that note, you might not have thought about this either. So here it is:
Negotiate with your existing mortgage company.
I know what you are thinking, you signed a million different pieces of paper promising that you would repay the money you borrowed over a 15-30 year period, and guaranteeing over and over again that you would, indeed, pay it back. And typically, yes, the rate is set in stone. At least, that is what I thought anyway, and why I heavily scrutinized every note to ensure that I maximize my mortgage options. But listen to me here: sometimes, you can negotiate.
Take the lender’s view point for just a moment. They like their mortgage the way it is, and don’t want to give back any money. But…they also know that they have a paying customer, who can go elsewhere to get a better rate. Some of them just might value your business enough to consider negotiating with you, instead of losing you to a competing lender.
So give them a call, let them know that you aren’t happy with your current rate, that you are a great customer, and that you would like to see them lower your fixed rate. You might be surprised at what can happen.
So why not just refinance, and get the better rate?
Look at this way. Refinancing is expensive. It isn’t as expensive as getting a new loan is, but there are still closing costs. So if you could renegotiate with your current lender, you are poised to get the market rate of interest, and only incur some nominal document fees to process the request. So instead of paying potentially thousands in refinancing costs, you may only have to pay just a few hundred dollars. Yeah you may not see a huge difference in cash money, but a couple thousand dollars can play in to the monthly payment you will be making on the property.
The bottom line is, it is worth it to ask. All they can say is no, and then you can continue your search for mortgage companies to refinance deal. So give it a try, and come back and let me know how you did.