To get started, talk with your current lender to find out what it will offer you. Then apply through one of these quote engine website to find out what other lenders will offer. When you get your offers, don't assume that's the bottom line. Lenders can see what others are offering and, to get your business, they will bid lower.
The bottom line when refinancing is getting the lowest possible interest rate on a fixed-rate loan with the lowest possible closing costs. But be sure you're comparing apples to apples when looking at closing costs. Make up a spreadsheet for the closing costs and compare each offer. You may find that the company offering the lowest closing costs is doing that by leaving out some key items, such as tax stamps or other charges unique to your state. When those items are added in the lowest offer could end up being the highest.
Often your current lender can cut closing costs more easily because they can reuse some of what they already have on hand. For example a title search and title insurance can be one of the most expensive items on your closing statement, but your current lender may be able to update the file and only charge a minimal amount for the service. You would only need to pay the cost for any additional title insurance coverage based on any change in value of the property rather than pay the full cost of the coverage.
Even if you're not planning to work with the same lender you may be able to ask the new lender to use the same title insurance company you currently have and just update the title search and policy to current levels. That can sometimes save you thousands on closing costs.
Even if your house is underwater, you may still be able to refinance and get a lower interest rate on your mortgage. Two programs are now available for underwater homeowners. One is the Home Affordable Refinance Program (HARP), which you can use even if your current mortgage is 125 percent of your home's current market price. Another option, if your lender will voluntarily cooperate, is the FHA Short Refinance option. This one may be harder to get because your lender must agree to reduce the principal you owe on the mortgage.
If you already have an FHA, you may be able to get a lower interest rate using the FHA Streamline refinance, which allows you to get a lower interest rate without even requiring an appraisal.
With all these opportunities available out there to refinance, don't hesitate to check out your chance to lower the interest rate on your home mortgage. Even lowering your rate by just one percent can result in thousands, if not hundreds of thousands of dollars, in savings depending on the size of your loan and the length of its remaining term.
Lita Epstein has written more than 25 books including The Complete Idiot's Guide to Improving Your Credit Score.