Key takeaways
- Refinancing can help you secure a lower interest rate, potentially saving you thousands of dollars over the lifetime of your loan.
- Refinancing with your current lender may have benefits, like avoiding some of the fees associated with switching lenders.
- While your current lender might offer competitive refinance rates and terms, it's a good idea to shop around and compare offers from other lenders, too.
One of the biggest questions for someone who wants to refinance their mortgage is who to refinance with. If you’re thinking of refinancing to tap into home equity or change your loan terms, here are the ups and downs of going with your current lender versus one of their competitors.
Can you refinance with the same lender?
You can usually refinance with the same bank or lender that you originally got a loan through. But keep in mind, your mortgage lender is the institution that originated your loan, and that may be different from your current servicer.
Lenders are responsible for processing, underwriting and closing on your loan (among other things). However, these companies often hand over their loans to servicers, who oversee the day-to-day administration of your loan. This includes taking payments, tracking your balance and initiating the foreclosure process if you default.
Because servicers don’t offer their own loans, you’ll need to go through a lender if you’re interested in refinancing. If your mortgage is currently held by a bank or company that originates loans, however, they may be able to extend a competitive rate or terms on a refinance, even if another lender originated the loan.
Is it better to refinance with your current lender?
When deciding whether to refinance with the same lender or a new one, you’ll want to consider a few things.
If you’re just looking for the lowest rate, shopping around to get multiple quotes can help you choose the right mortgage refinance for your needs. Find the best rate and terms with different lenders and see if your current lender will match it. But be prepared to refinance with a different lender if cost is your number one priority.
“Most lenders want to keep their customers, most lenders want to preserve that relationship,” says Joel Kan, vice president and deputy chief economist at the Mortgage Bankers Association. “They want to keep the servicing of the loan.”
That means your current lender may be willing to waive some fees or match lower rates that a competitor offers, reducing your costs to refinance. But in general, shopping around is the best way to find the lowest rate. Think of it this way: If you don’t shop around, you won’t know whether your lender is offering you a competitive deal.
Advantages of refinancing with the same lender
- Ease of application – Your lender may already have some of your information on file
- Ease of payment – You won’t have to learn a new way to log in and pay your mortgage
- Account consolidation – If you already do all of your banking at the same place that holds your mortgage, you have fewer accounts to keep track of
Disadvantages of refinancing with the same lender
- You may not get the best interest rate possible.
- You may not get the lowest fees possible.
- You may not get the best loan terms possible.
Why you should shop around for your mortgage refinance
Refinancing can help you secure a lower interest rate, which is a great way to decrease your monthly payment and the amount of money you spend on interest. But to find the best rate, you might have to look beyond your current lender.
“Shopping around for a mortgage is especially important when you’re refinancing,” says Jeff Ostrowski, Bankrate’s principal home lending writer. “After all, a prime goal of a refi is to save money. What’s more, your status as a homeowner with equity and a solid credit score could give you some leverage to lower fees.”
Shopping around and comparing offers is the best way to find the lowest refinance rates possible. This is true when rates are moving more erratically.
Comparison shopping is especially important when rates are bouncing around. Research from Freddie Mac shows that the savings from comparison shopping are amplified during times of rate volatility.
— Jeff Ostrowski, Principal Writer, Bankrate
It might not sound like much, but even a slight reduction in your interest rate can save you thousands of dollars over the loan’s lifetime. Exploring your options also lets you find the loan that matches your goals and needs.
How to get the best refinance rate
Strategies you can use to get the best refinance rate possible include improving your credit score, buying points and shopping around with different lenders. While it may be easier to just go with your current lender when refinancing, you might be able to get a better rate — and save money — by going with one of their competitors.
FAQs
If your current lender offers the best deal or is willing to match the best deal you find with another financial institution, the refinancing process could be easier and you won't lose any money by staying. It could also make your life a bit easier in the long run to keep the same lender.
Is it easier to refinance with existing lender? ›
Refinancing with your current lender may have benefits, like avoiding some of the fees associated with switching lenders. While your current lender might offer competitive refinance rates and terms, it's a good idea to shop around and compare offers from other lenders, too.
Can I refinance with a different mortgage lender? ›
You don't have to refinance with your current lender. If you choose a different lender, that new lender pays off your current loan, ending your relationship with your old lender. Don't be afraid to shop around and compare each lender's current mortgage interest rates, availability and client satisfaction scores.
Who should I refinance my house with? ›
Best Mortgage Lenders for Refinancing
| Lender | Learn More | Min. Credit Score |
|---|
| PNC Bank 4.7 | See Offers | 620 |
| Discover 4.7 | See Offers | 620 |
| PenFed Credit Union 4.6 | See Offers | 620 |
| U.S. Bank Mortgage 4.6 | See Offers | Not disclosed |
7 more rowsShopping around with different lenders is the best way to save money on the interest rate and closing costs. Your lender knows the rate you currently pay, and it might offer you slightly lower terms. But when you get rate quotes from multiple lenders, you can use the information to negotiate.
Does refinancing hurt your credit? ›
In conclusion. Refinancing will hurt your credit score a bit initially, but might actually help in the long run. Refinancing can significantly lower your debt amount and/or your monthly payment, and lenders like to see both of those. Your score will typically dip a few points, but it can bounce back within a few months ...
At what point is it not worth it to refinance? ›
Moving into a longer-term loan: If you're already at least halfway through the loan term, it's unlikely you'll save money refinancing. You've already reached the point where more of your payment is going to loan principal than interest; refinancing now means you'll restart the clock and pay more toward interest again.
How much do interest rates need to drop to refinance? ›
If you have a mortgage with a higher balance and rate, a drop of 0.5% interest could be worth refinancing, according to Dell. "For a lower balance, rate and term refinance, it may be at least 1% or more to be worth your time and money," Dell says. It's also important to consider how long you plan on living in the home.
What are mortgage refinance rates today? ›
Current mortgage and refinance interest rates
| Product | Interest Rate | APR |
|---|
| 20-Year Fixed Rate | 6.72% | 6.77% |
| 15-Year Fixed Rate | 6.39% | 6.47% |
| 10-Year Fixed Rate | 6.28% | 6.35% |
| 5-1 ARM | 6.52% | 7.86% |
5 more rowsOnce mortgage payoff funds are posted, money held in escrow with your current lender will be returned to you from that lender. The existing escrow account cannot be transferred unless your current lender is the same as your new lender, in which case your payoff will be reduced by your current escrow balance.
Lender Changes May Lead To A Longer Loan Timeline
The only real risk when changing lenders after your offer has been accepted is that it might make it difficult to close on time. If the sellers want to close quickly, any delay might jeopardize the sale, especially if the desire to switch comes later in the process.
How difficult is it to refinance? ›
At the same time, refinancing can be a little complicated, especially if your credit score is less than ideal or you're not completely sure what to expect. When you refinance, it means you're essentially taking out a brand new loan on your property, often for the remainder that you owe (but not always).
Should I refinance with the same lender? ›
Refinancing with the same lender may or may not work for you and your specific financial situation. Before you opt to remain with the same lender or take your business elsewhere, it's important to compare other lenders and your current lender to uncover which option will be most cost-effective to refinance your loan.
What is the best company to refinance with? ›
Our Top Picks for the Best Mortgage Refinance Lenders of June 2024
- Ally Financial – Best for Jumbo Loans.
- Bank of America – Best for Member Discounts.
- Better – Best for Fast Closing Time.
- loanDepot – Best for Online Mortgage Refinancing.
- Nationwide – Best for Custom Loans.
- Navy Federal Credit Union – Best Credit Union.
Yes, mortgage interest rates are expected to go down a little in 2024, then more noticeably in 2025.
Is it easier to remortgage with the same lender? ›
The process of remortgaging with the same lender tends to be fairly straightforward. If all you are doing is moving to a new deal and not changing anything else, your existing lender may be happy to proceed without another affordability check, credit check or property valuation.
Is there a downside to refinancing multiple times? ›
Cost of refinancing multiple times
It doesn't always make sense to keep refinancing your home simply because interest rates go down or your credit score goes up. Like your first mortgage, a refinance has closing costs.
Why is refinancing a mortgage not always a good choice? ›
Refinancing to a lower interest rate doesn't always result in substantial savings. Suppose the interest rate on your 30-year fixed-rate mortgage is already fairly low, say 5%. In that case, you wouldn't be saving that much if you refinanced into another 30-year mortgage fixed at 4.5%.
At what interest rate difference should you refinance? ›
As a rule of thumb, it's usually worth it to refinance if you could lower your current rate by one percent. One percentage point is a significant rate drop, and it should generate meaningful monthly savings in most cases.
