Should You Refinance With the Same Lender?

Regardless of whether you’re a new homeowner or someone who purchased their home ages ago, refinancingThe process of paying off your existing mortgage and replacing it with another in order to save money or pay off your loan sooner.refinancingThe process of paying off your existing mortgage and replacing it with another in order to save money or pay off your loan sooner. is an available option that could save you money. Because a lot of things can change over time, refinancing can replace your old loan with an updated one that better aligns with your current financial situation and goals.

If you think refinancing is something you’d want to move forward with, the next thing you should consider is with whom you will refinance your loan. Believe it or not, you don’t have to refinance with the same lender you worked with for your original loan. And you shouldn’t feel like you have an obligation to go to the same lender if another is offering a better rate.

In any case, selecting a lender for your refinance is a decision that should not be rushed. Think of the process like a new mortgage, rather than just refinancing. Take your time and do as much scouting on the different lenders, including your old one, as possible. To make your decision a little easier, we’ve gathered a few of the reasons you might want to stick with your lender or seek out better options.

Refinancing With Your Lender

In with the old and out with the new! It’s possible you loved your last mortgage experience, or maybe you’re a creature of comfort. Whatever the reason, refinancing with someone you’ve worked with in the past has its perks.

For starters, it should be a seamless process. Conveniently, your old lender will already have some of your financial documents and records on file, depending on how recently you worked with them. That means you won’t have to restart the mortgage process all over again. Yes, refinancing means you’re essentially replacing your loan with a new one, but that doesn’t mean your credit and payment history will be a mystery to them.

Another benefit of refinancing with your current lender is you might gain access to lower fees. Since you’ve already proven to be a trustworthy borrower, your lender could eliminate some costs, such as the loan origination feeBetween 0.5% and 1% of the loan amount charged to the borrower as repayment for processing.loan origination feeBetween 0.5% and 1% of the loan amount charged to the borrower as repayment for processing.. Once again, nothing is guaranteed, but saving money is a nice perk when it happens!

Refinancing With a New Lender

Sometimes, it’s nice to start fresh – new mortgage, new lender. A case for refinancing with a new lender might arise when you see other lenders offering more favorable rates or terms for your current financial situation and goals. Another might be if you had a poor experience with your last mortgage. Granted, you’ll have to fill out and provide all the documents (and some new ones) you once did for your former lender, but it might all be worth it when you start saving money on your monthly mortgage payments.

More than likely, your new lender will communicate with your mortgage company, so you won’t have to act as a liaison between the two parties. However, your new lender might have some contingencies that must be accomplished before your loan is refinanced. Some examples might be a home appraisal, well inspection, or termite report. These types of contingencies could increase the time before you make it to the closing table.

Why You Should do Your Homework

You wouldn’t buy the first car you saw online when car shopping, so why go with the first mortgage company you see?!

When you want to refinance, do your homework! Your mortgage is likely the largest loan you will ever take out, so study your options to make sure you’ve found the best deal for you. Go to different lenders’ websites and read about everything they offer. Take note of any slight differences in interest rates or origination fees. The money you save, no matter how small, will add up over time.

Expert Tip

Fill out refinance applications for a few different lenders. Within three business days, they’ll send you a Loan Estimate, which outlines all the details of your prospective loan. The application is not a commitment to one lender, so compare Loan Estimates to find the best terms and estimated fees.