Should you refinance with the same lender?
Our goal is to give you the tools and the confidence you need to improve your finances. While we do receive compensation from our partner lenders, whom we will always identify, all opinions are ours. Credible Operations, Inc. NMLS # 1681276, is referred to herein as “Credible”.
There are many financial institutions you can choose from when it comes to refinancing a mortgage. But if you were happy with the location that originally funded your loan, you might be wondering if you should refinance with this same lender.
Before making a decision, you will need to understand your own goals and shop around to find the right one for you.
Here’s what to consider if you’re looking to refinance with the same mortgage lender:
Can you refinance with the same lender?
Yes, you can refinance your mortgage with the same bank or lender. According to a report by Black Knight, 28% of all homeowners who refinanced in the first quarter of 2021 stayed with their current mortgage company.
This might be a good option if your lender:
- Offers low interest rates or closing costs
- Offers discounts to loyal customers
- Close Refinance Loans Quickly and Efficiently
Before you embark on this path, you will need to know:
- Who is your loan manager? Your mortgage lender is the institution that funded your home loan, but it may not be the same company that now processes your payments and manages your account. Since your loan manager may not be the originator of the loans, you need to make sure you are talking to the right company.
- Do you have to meet a waiting period? Some lenders require borrowers to wait at least six months before refinancing a home loan. So if you’ve recently closed your mortgage and want to refinance with the same lender, you’ll need to ask if it’s possible.
- Is Your Original Lender Offering What You Need? There are many types of refinance loans, such as interest rate and term refinancing and cash refinancing. Some lenders also offer programs like FHA Streamline Refinances and VA Streamline Refinances. Make sure your original lender can meet your refinancing goals.
Benefits of refinancing with the same lender
Refinancing your mortgage with the same lender has two major advantages: money savings and convenience.
You could save money
Like your original mortgage, refinancing a home loan comes with costs. These closing costs typically range between 2% and 5% of the total loan amount, or about $ 5,000 on average, according to Freddie Mac.
However, your lender might waive or reduce some fees if they already have an appraisal report, title information, and a mortgage insurance policy on your property. You could save money on these costs:
- Title insurance costs
- Mortgage Loan Insurance Fee
- Loan origination fees
- Home assessment fees
You may be able to negotiate better terms
Since you have an established relationship with your original lender, the company can take additional steps to keep you as a customer. Your lender might be willing to match a lower interest rate or a competitor’s closing quote. This is especially true if you have good credit and a history of on-time mortgage payments.
Also read: 6 ways to negotiate the cost of closing a home
The process could be faster and more convenient
It might be easier to refinance with the same lender since you already have an established relationship. The company has your information on file, including your payment history and financial details, so they might be able to streamline some of the paperwork required when refinancing.
Also, if the bank or credit union you use for your personal finances also underwrites your home loan, it might be more efficient to keep everything under one roof.
Disadvantages of refinancing with the same lender
Sometimes change can be a good thing. Changing your mortgage lender can be a good idea if they can’t close your loan quickly, offer poor customer service, or offer you the lowest rate.
They might have capacity issues
According to the national real estate database ATTOM Data Solutions, refinancing in the first quarter of 2021 was at its highest level in more than 14 years. This means that financial institutions have been busy offering a record number of home loans. If your original lender is popular, you might experience closing delays.
As part of the loan purchase process, you will need to ask your lender if they have the capacity to get another refinance loan and how long it might take. Industry-wide, lenders take an average of 47 days to close refinance loans, according to data from ICE Mortgage Technology, but some are able to turn things around faster.
You might get better customer service elsewhere
Each mortgage lender offers different services. Some financial institutions have an end-to-end digital process that emphasizes efficiency and savings, while others offer physical branches to provide in-person assistance. Additionally, some lenders have higher customer satisfaction ratings.
If you’re unhappy with your original lender or current loan manager, switching lenders might give you a better experience.
You could lose money savings
Shopping around for different lenders is the best way to save money on interest rate and closing costs. Your lender knows the rate you are currently paying and may offer you slightly lower terms. But when you get quotes from multiple lenders, you can use the information to negotiate.
Credible makes it easy to compare different lenders and refinance options. In just a few minutes, you can view personalized prequalified rates from all of our partner lenders. Checking rates with us is free and secure, and it will have no effect on your credit score.
How to negotiate with the lender
You can refinance a mortgage with the same lender, but negotiating the details is important in order to save money. Follow these steps to get the best deal:
- Get quotes from multiple lenders. Compare the interest rate you will pay with the closing costs and your monthly loan payment. Credible can help.
- Ask other lenders to offer a better rate. Take the best deal and ask other lenders to offer a better interest rate or closing costs, or both. Your original lender may be more willing to compete for your business if they know you’re shopping.
- Consider paying discount points. A point of discount is a commission that you can pay in exchange for a lower interest rate. If you know you’ll be staying home long enough to recoup that cost, it might be worth it.
- Get everything in writing. If a lender offers a better deal, ask them to send it to you in writing.
Keep reading: What to expect when you close a house