Is it better to refinance with the same lender?
Refinancing with your current lender may have benefits, like avoiding some of the fees associated with switching lenders. While your current lender might offer competitive refinance rates and terms, it's a good idea to shop around and compare offers from other lenders, too.
Refinancing with the same lender may or may not work for you and your specific financial situation. Before you opt to remain with the same lender or take your business elsewhere, it's important to compare other lenders and your current lender to uncover which option will be most cost-effective to refinance your loan.
You'll typically need a home appraisal to refinance your mortgage, both to confirm your home's value and to set your new loan amount. If your refinance appraisal comes in too low, though, you may not be able to refinance unless you use a streamline (no-appraisal) refinance program.
As a rule of thumb, experts often say that it's not usually worth it to refinance unless your interest rate drops by at least 0.5% to 1%. But that may not be true for everyone.
Condition of the home
The appraiser will inspect each of the home's systems, including plumbing, HVAC and electrical. When inspecting the HVAC system, the appraiser may seek answers to questions such as: How old is the HVAC system? Does it work properly?
The process of remortgaging with the same lender tends to be fairly straightforward. If all you are doing is moving to a new deal and not changing anything else, your existing lender may be happy to proceed without another affordability check, credit check or property valuation.
If you are refinancing your mortgage with your current lender, then your escrow account may remain intact. That means that the funds you have in your account before the refinance will remain in the original escrow account.
If A House Is Appraised Higher Than The Purchase Price
It simply means that you've agreed to pay the seller less than the home's market value.
If the appraiser finds that your home is worth less than what you owe or less than what is beneficial from a loan to value standpoint, your loan could be denied or it may not be beneficial.
If you've made an offer on a home and your lender's appraisal values the property at less than you've bid, the lender won't approve the full mortgage amount even if you qualify for it. In order for the purchase to go through, you may need to supply extra cash.
What is the harm in refinancing?
Refinancing can save you money if you get a lower interest rate, but you could also end up paying more if you refinance simply to extend the loan term. Refinancing can help you consolidate debt or tap your home equity for extra cash for renovations, but it can also lead to more debt.
In today's market, a good mortgage interest rate can fall in the high-6% range, depending on several factors, such as the type of mortgage, loan term, and individual financial circ*mstances. To understand what a favorable mortgage rate looks like for you, get quotes from a few different lenders and compare them.
MBA: Rates Will Decline to 6.1% In its February Mortgage Finance Forecast, the Mortgage Bankers Association predicts that mortgage rates will fall from 6.9% in the first quarter of 2024 to 6.1% by the fourth quarter. The industry group expects rates will fall below the 6% threshold in the first quarter of 2025.
An applicant can be denied refinancing for various reasons, from a low credit score to a new job. If you know why you were turned down, you can work on the problem and reapply.
If you are ready to have your home appraised, you should address any significant issues that may affect your home's value—such as damaged flooring, outdated appliances, and broken windows. A messy home should not affect an appraisal, but signs of neglect may influence how much lenders are willing to let you borrow.
The appraisal professional who performs your appraisal is not concerned with whether or not your dishes are done, or your laundry is put away – these things don't affect the value of your home, and the value of your home is what an appraisal is all about.
While it may be easier to just go with your current lender when refinancing, you might be able to get a better rate — and save money — by going with one of their competitors.
You could save money (at least initially)
By sticking with the same lender, you may not need to pay a valuation fee and you may not need a solicitor, so you'll save on those costs. You might also avoid paying a redemption fee.
While mortgage product transfers are often quicker than changing mortgage provider - often there are just a few clicks involved - they may not be the best option for everyone. When you change mortgage deals with the same lender, you normally don't go through full affordability checks or credit checks.
Your current lender already has a lot of your information on file, and sticking with them can help speed up the closing process. This may be particularly helpful if you're considering a cash-out refinance and want to close as soon as possible.
Do I get my escrow money back when I refinance?
Once mortgage payoff funds are posted, money held in escrow with your current lender will be returned to you from that lender. The existing escrow account cannot be transferred unless your current lender is the same as your new lender, in which case your payoff will be reduced by your current escrow balance.
If you have a remaining balance in escrow after paying off your mortgage or refinancing to a new lender, you should receive an escrow refund. This check reflects the amount of money remaining.
In a seller's market, where sellers hold more negotiating power, they'll have little incentive to lower their price in response to a low appraisal. In all likelihood, buyers will have to make up the difference between the loan amount the lender is willing to offer and the purchase price.
Can the seller back out if your appraisal is high? Realistically, the answer is “no.” For one, they accepted your offer and would be breaching the sales contract if they wanted to put the house back on the market to capture a higher price.
it is important to note that the appraiser's role is not to appraise the property to match a specific sales price or loan amount, but rather to provide an accurate valuation based on market conditions.
