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How
to refinance your loans without going crazy?
Tips
to refinance almost any loan so that you win
 The
whole idea of dealing with banks and doing the paperwork
seems so intimidating that most people simply do not
refinance. That is not always good financial
planning. But who likes paperwork and
negotiations? However, what about the savings from
refinancing any loan. And I don't like to make my bank
rich. I want to be rich myself. (Related:
Personal finance for empty nesters) Should you refinance?
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This is
generally a question best answered for your specific
situation. There are many resources on the Internet that
let you enter your information (like loan amount, current
interest rate, etc.) and tell you if you should refinance or
not. That is good research and I strongly encourage you
to do it using several different scenarios. This
research will come in very handy at the next step and I will
get to it momentarily. According to my research, a
decision to refinance is very specific to what your situation
is and what the bank is willing to do for you. The
conclusion: You should start shopping around once you
have done your basic research. (Note: I am
referring primarily how to refinance your mortgage but this
advice is applicable to any loan that you can refinance) How to refinance and keep smiling?
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- Do your research. Visit websites of
banks and other independent websites that provide
information on personal finance. Compile information
on rates in your area, for your asset type, and anything
else that you find relevant to your situation. Good
research is key. (Related:
How to survive falling property prices) Companies don't screw around with
smart customers. If they know what you are talking
about, they shut up and listen to you. If they know
you are clueless, they want to screw you as much as they
can. When you have done your research, you will talk
with more confidence and that will allow you to negotiate
like a pro.
- Call your existing bank. Tell them
that you want to find out if it makes sense to refinance
your loan. Since they already have
 a lot of your
information, it is easy to find out what your options
are. Write down their offer and say "thank you
very much." Don't get pushed into actually
deciding. Ask for time to think. (Related:
Online shopping safety)
- Now start visiting the websites of other
banks and a lot of other financial institutions like
e-Loan, Ditech, quicken, Lowermybills, and LendingTree.
Do your research on these websites to see what you should
expect to pay. Now pick just top five institutions
and give each one of them a call. Tell them that you
are shopping around. You don't have to tell them the
offers that you already have. (Related:
How to avoid foreclosure)
- Once you have six different offers, see
which ones are best and pick the top three and the one
from your existing bank. If your bank is the best,
call them and find out if that is the best that they can
do. Since there is a very small possibility that
they want you to dump them (the acquisition cost of a
mortgage account runs into hundreds of dollars for a bank)
so you are in a strong position to bargain. If you
are satisfied (because you got the best deal or the deal
is not the best but the difference is so small that you
might not want to go through the hassle of going to
another bank), just do the paperwork and move on.
- If your current bank mistreats you, it is
best to dump them and move on to the other three
banks. Bargain with them and ask for the rate and
other features that you have in mind. Now pick the
bank that meets all or most of your requirements. Do
the paperwork and move on.
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