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Refinancing With The Same Lender: Is It A Good Idea?

December 13, 2023 4-minute read

Author: Victoria Araj

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When embarking on a mortgage loan refinance, you’ll have the option to refinance with your current lender or choose a different lender. It’s important to consider both options before you move forward with the refinance process, because this decision could impact your interest rate and other fees.

Let’s take a close look at whether you should refinance your mortgage loan with the same lender or a new one, and we’ll explore the pros and cons of both options.

Should You Refinance With The Same Lender?

Whether you should refinance with the same lender is going to come down to several factors – one being the costs associated with the refinance. One of the best ways to determine if refinancing with the same lender is going to be your best option is to estimate the cost of this refinance versus the cost of refinancing with one of their competitors. Making such an estimate requires shopping around for other lenders so you can figure out if your current lender has the lowest costs.

If your credit score has gone up and your debt-to-income ratio (DTI) has decreased since you applied for your original home loan, it might make the most sense to find a new lender for your mortgage refinance.

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The Pros And Cons Of Refinancing Your Home With The Same Lender

If you’re thinking about refinancing your mortgage with the same lender, it’s worth giving some thought to the following advantages and disadvantages of choosing this path.

Pros

  • The lender already has your information. Staying with your current lender means they know you and have your financial information on hand. You still might have to update some financial documents, but a lender being able to easily access your main info can keep the refinance process moving along smoothly.

  • You’re familiar with the payment process. Refinancing with the same lender means you’re already up to speed on the payment process and how it works. Learning a new process can be frustrating and take extra time.

  • You might continue having good service. If you’ve had a positive experience working with your current lender, you’ll most likely continue to enjoy this great customer service during the refinance process and for the foreseeable future.

Cons

  • You might not have the best interest rate. There’s always a chance that your current lender might not offer you a lower interest rate for your refinance.

  • You might not have the lowest fees. It’s possible that your current lender might not offer the lowest fees, which could make refinancing your loan with them more costly than going with another lender.

  • You might not get the best loan term. Refinancing with the same lender might result in not being offered the best possible loan term. This is why it’s a good idea to explore your options.

The Pros And Cons Of Refinancing With A Different Lender

As is the case when refinancing with the same lender, refinancing with a different lender comes with both some advantages and disadvantages worth weighing.

Pros

  • You could get a better rate. Shopping around for a different lender and ultimately choosing one could help you secure a better interest rate for your refinance.

  • You could get better service. Refinancing with a different lender could lead to a better overall customer service experience – including an easier payment process – than you’ve had with your current lender.

  • You could pay less upfront. Working with a different lender could allow you to pay less in various upfront closing costs on your new loan.

Cons

  • You’ll have to open a new account. Refinancing with a different lender means you’ll have to open a new account, which has the potential to be a pain and a little time-consuming.

  • You don’t know how the service is long-term. When you select a new lender for a refinance, it’s impossible to know how good they’ll be to work with over the long term.

  • You’ll need to calculate whether changing lenders is worth it. Shopping around for a new lender means you’ll want to make some calculations to reach a conclusion on whether changing your mortgage lender for a refinance is going to ultimately save you money.

How To Figure Out If Refinancing With The Same Lender Is Right For You

Since refinancing with the same lender is going to look a little different for every borrower, whether you should stick with this same lender or switch to a different one is going to depend on the nature of your personal financial situation. However, you can take a couple of key steps – which we’ll examine next – that can help you know if refinancing with the same lender is going to be right for you.

Talk With Your Current Lender

Take the time to speak with your current mortgage lender about what a refinance with them would look like. Ask about all refinancing costs, your future monthly payment and the interest rate they can offer you. Gather all of this information so you can check with other lenders and compare the numbers before making a decision.

Research And Shop Around

It never hurts to do your research and seek out a potentially better lender – especially if your goal in refinancing is to save money. Talk with other lenders and gather all of the information you need to compare those lenders with your current lender. Then, you should be able to more easily settle on whether you’ll get a better refinance deal with your current lender or a new one. Take note of each lender’s loan terms, payment system, upfront costs, current interest rate and any other incentives or drawbacks.

The Bottom Line

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. Talk with your current lender about your refinancing plans to see what they can offer you, and then find out if another lender could give you a better deal.

Are you ready to refinance? Get started on the refinance process today.

Victoria Araj

Victoria Araj is a Section Editor for Rocket Mortgage and held roles in mortgage banking, public relations and more in her 15+ years with the company. She holds a bachelor’s degree in journalism with an emphasis in political science from Michigan State University, and a master’s degree in public administration from the University of Michigan.