Which of these lenders would you choose? Would you pay points?

[Steve S.]

So, after starting an application with a lender on these forums back in December, who took all the forms, checked my credit, and then suddenly stopped replying to emails, calls, and texts, I now have offers for a refi from two different lenders. 

One is local to my property area, and is offering 4% with (I think) zero points. (I'm waiting for the Estimate to verify this.) This lender does respond, but slowly. Small bank in a small town.

The other is from an online lender that is offering 4% with $854 in points on a $195k loan. Or I can choose to pay more points for a lower rate: for example, $3639 for a rate of 3.625. Or I could pay $50 for a rate of 4.375. This lender responds quickly and is ready to go forward. 

Which lender would you choose, and if the second, would you pay points? If I understand correctly, investors can't deduct points in the year that they are paid, but over the life of the loan.

Thanks.

[Steve S.]

Thanks again, @Rene Owczarski! I especially like your thoughts about the advantages of working with the local bank.

I sent the competing estimates to each lender, asking if they will match/beat. (I covered up their names.) We'll see what happens.