Whether it’s better to refinance with the same lender depends on different factors, like if you’re looking for a lower interest rate or a better monthly payment. Shopping around for loan estimates from other lenders could give you more negotiating power if you wish to refinance with your current lender.
Refinancing a mortgage often allows borrowers to cut down on their homeownership costs, especially if their credit score or income has increased since they initially took out their home loan. But is it better to stick with your current lender or find a different one?
Jerry
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shopping, is here to walk you through whether you can refinance with the same bank and what to do to increase your odds of getting the best terms for your new loan.Should you refinance with the same lender?
If you wish you had a lower interest rate or better terms with your current mortgage, it might be a good time to look into mortgage refinancing.
When you’re exploring your options, refinancing a mortgage loan with your current mortgage company can often seem like a more comfortable option.
Even though you might have worked with an existing lender before, it’s important to consider the terms of any new lending option closely to make sure it’s truly the right decision.
Not all mortgage lenders offer refinancing for loans they originated, either, so it’s a good idea to confirm whether you actually can refinance with your current bank.
Some considerations you’ll want to make note of when seeking out a new mortgage refinance include:
Any changes in your interest rate or monthly mortgage payment
Closing costs and what they’ll include
Whether mortgage insurance will be required
What kind of refi you’re looking for (cash-out refinance, no closing costs, etc.) and how its terms might compare to other lending options
Other applicable fees, including origination fees
When it comes to refinancing with your original lender or bank, here are some of the major pros and cons.
Pros of refinancing with your current mortgage lender
Many lenders are motivated to present their current borrowers with competitive options in order to keep their business—especially when they’ve been reliable in making timely payments thus far.
Here are some advantages of refinancing with your same bank or lender:
You’re already familiar with the lender: If you’re refinancing with the same lender, you’re probably already familiar with their payment processes and how to reach customer service when you have issues or questions. You’ll also be able to keep your personal finance information in one place.
You might see reduced fees: It’s possible that to keep your business, a bank or lender might offer reduced refinancing fees—or even waive them altogether.
The process could go faster: Working with the same bank for your refinance could help streamline the process, as they have much of your information on file already, like your payment history and income.
Cons of refinancing with your current lender
With all its advantages, there can also be disadvantages that come with refinancing with the same lender. Here’s a look at some of the potential drawbacks if you refinance with the same bank:
You might find better options elsewhere: Just because your current lender was your best option when you took out your loan doesn’t mean they’re still your best option for refinancing. That’s why it’s a good idea to shop around when refinancing to see what kinds of monthly payments, interest rates, and loan terms you could find elsewhere.
You could have less negotiating power: Your current lender knows what you're paying for your current loan and its terms, so they might not feel pressured to offer you competitive refinancing options. If you’re considering sticking with your current lender, first shop around for other offers as well to give yourself more opportunities for negotiation.
You might still have to submit documents: You probably don’t want to have to submit extra information or documents again, but it may be unavoidable. Your new loan will still go through an underwriting process, which means you might have to re-verify your employment status, provide new proof of income, have your home reappraised, and get a new credit report check.
You’ll be stuck with the same service: If you’ve been less than impressed with your current mortgage provider, a refi through the same lender will only extend your relationship with them.
Is it cheaper to refinance your loan with the same lender?
It depends. Refinancing your loan with the same bank can give you less negotiating power in the end, since they already know exactly what your current monthly payment and other loan terms look like.
On the other hand, you can increase your odds of getting the best rate and terms on your refinance by shopping around for offers from different lenders, which could end up giving you more negotiating power with your current lender.
While it’s worth keeping in mind that real estate market conditions can impact mortgage rates in ways lenders can’t control, you won’t know how your options with different lenders might compare until you seek them out.
It’s often a good idea to seek out refinanced loan estimates from three to five other lenders so you can compare your options.
If you apply for multiple mortgage applications within a 45-day window, your credit score won’t be as negatively affected, per the Consumer Financial Protection Bureau
. You might also be able to pre-qualify for refinancing offers without affecting your credit score. Once you have your loan estimates, you can use them to negotiate a better offer with your current lender.
MORE: Does refinancing a car hurt your credit score?
What are the closing costs of refinancing a mortgage with your current lender?
Remember that when you refinance a mortgage, you won’t be responsible for a down payment, but you’ll usually have to pay closing costs upfront again.
Some lenders offer mortgage refinances with no closing costs, but these often come with higher interest rates and monthly loan payments.
Typical closing costs can range from 2-6% of the loan amount. What they’ll include varies based on factors like your location, your credit score, and your home’s value (and how it compares with your current loan balance).
You might be able to negotiate lower closing costs if you refinance with your current lender—if they’re motivated to keep your business.
How to negotiate your refinance loan with your current lender
Finding the best refinancing option can take a lot of time and effort, but the savings you could see on the long run often make it worth all the effort.
Here are some steps you can take to negotiate a refinance with your current lender:
Gather refinance loan estimates from other lenders: Make note of each option’s interest rate, loan term, closing costs, and any other applicable fees or costs. Pay attention to additional services that might be available to you from each lender.
Request your current lender waive or lower fees: If your current lender is serious about keeping your business, they may be willing to waive or reduce elements of your closing costs, like appraisal costs, or other fees associated with the loan.
Ask about additional discounts or rebates you’d qualify for: Your lender may have certain offers that could apply to your refinance.
Point out that you’re shopping around: With your other loan estimates in hand, see if your current lender is able to match or even one-up the loan terms you’ve found elsewhere.
If you’re underwhelmed by what your current lender has offered you for refinancing options, don’t hesitate to take another lender up on their offer instead.
Depending on your circumstances, you might decide it’s better for you to wait to refinance—and that’s okay, too.
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