Refinancing with the same lender sounds convenient, right?
You’d be able to save some time (since you don’t have to look for a new one), plus it may require less paperwork.
But, the question is: Is it actually a good idea?
In this article, we take a look at the pros and cons of refinancing with your current lender – and how you can make sure that you’re getting the best deal.
Refinancing with the Same Lender: The Pros and Cons
Choosing to refinance with your current lender can help simplify the process; however, there are some factors to consider before taking that step. It’s worth exploring other lenders first to make sure that you get the best deal possible.
Can you refinance with the same lender? Yes. If you’re satisfied with your current lender, you can choose to continue working with them. When you refinance with the same lender, the process is a little quicker, it requires less paperwork, and sometimes, you can even save money on closing costs.
Listed below are some of the pros of working with the same lender when refinancing your mortgage:
- You already have an established relationship with your lender, which can make the process a whole lot easier. Plus, your lender already has your information and knows your history.
- You may have to pay lower fees, especially if your current lender is keen on keeping you as a client.
- You may experience a faster processing time, which means that you can close the deal faster than the average 40 days it usually takes to close a refinance.
There are also some downsides to refinancing with your current lender. Here are some of them:
- You may get fully vetted again, like a new customer. Despite your existing status, your current lender may require you to go through a full underwriting process. The chances of this happening are higher if it’s been several years since you took out your mortgage.
- Your lender knows your current rate, so they have the advantage. How? They might offer you a rate that’s just slightly lower than what you’re paying – but not the best rate you could get if you shopped around.
- New lenders are competing for your business, which means that they are more likely to offer better incentives with their refinances. While your current lender could offer a better deal, you should still compare rates from at least 3 different lenders.
Refinancing with your current lender: Yay or Nay?
Refinancing with your current lender comes with its pros and cons.
On one hand, refinancing with your current lender is convenient – it saves you the trouble of changing your mortgage company, learning new processes, or filling out more documents. However, deciding based solely on convenience could be a costly mistake.
When you work with your current lender, they are more likely focused on retaining your business. However, that doesn’t necessarily mean that they will offer you the best deal. Your current lender may provide you with a slightly lower rate than you currently have, assuming that you’re happy to take their lower rate because it’s convenient.
If you think it’s time to refinance your mortgage, make sure to carefully weigh the pros and cons of working with your current lender. Do your due diligence. Shop around. Run the numbers. Having all the information, including refinancing processes and lender fees, will help you decide if you should switch mortgage lenders.