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Refinancing with the same lender may seem like the obvious choice when you're ready to restructure your mortgage. However, there are advantages and disadvantages to sticking with your current bank versus refinancing your mortgage with a different lender. Here's what you need to know.
Read more: How soon can you refinance a mortgage after buying a home?
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Can you refinance with the same lender?
You can generally refinance with the same lender you used for your current mortgage loan — as long as you meet the company’s requirements.
Remember that some loan providers will sell mortgages to a different lender or servicer who handles your repayment. So, your loan may no longer be with the same bank. You can see who manages your home loan by checking your monthly statement.
Ultimately, you can refinance with your original lender or shop around and compare lenders for mortgage refinancing.
Pros and cons of refinancing with the same mortgage lender
Choosing the same bank for a mortgage refinance can be simpler, but you may miss out on better deals.
Pros of refinancing with the same lender
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Streamlined application: Your current lender already has a lot of your personal and financial information. You may have a more straightforward application process than you would with a new bank — although it’s not guaranteed.
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Potential discounts: Some lenders may offer a lower interest rate, reduced fees, or other perks to current customers who refinance with them.
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Convenience: You likely won’t have to worry about a new account login and payment system or a change in customer service when you choose to refinance with the same lender.
Cons of refinancing with the same lender
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Potentially higher interest rate: Without at least shopping around and comparing refinance offers, you won’t know if you’re getting the best deal on mortgage rates.
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Less leverage to negotiate fees: A new lender may offer lower loan costs to attract you as a new customer — something you’ll miss out on if you stay with the same bank.
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Limited loan terms: By sticking with your current lender, you also limit yourself to their loan options. For example, maybe you want to refinance into a 40-year mortgage, but your lender doesn’t offer one.
Should you refinance with the same lender?
Whether you refinance with the same lender or a different lender depends on your needs and priorities.
Using the same mortgage lender could be more convenient and come with benefits you wouldn’t have even considered.
“Using the same lender can be beneficial if you have an escrow account for property taxes and homeowners insurance,” said Darren Tooley, senior loan officer at Cornerstone Financial Services, via email. “If you refinance with your current lender, they can either net or transfer the balance from the original loan to the new loan. A new lender will need to create a new account, possibly resulting in an escrow surplus or shortage you’re responsible for paying at closing.”
At the very least, you’ll want to shop mortgage refinance offers with multiple lenders to compare what’s available.
“While refinancing with your current lender can provide some convenience, refinancing with a new lender could be the best option in the long run,” noted Tooley. “It’s worth contacting a few other lenders who have either been recommended or have positive reviews. They may be able to offer a more competitive rate and lower closing costs as an incentive to earn your business.”
How to shop for the best mortgage refinance
You’re more likely to get the best mortgage rate when you compare rates and fees between multiple lenders.
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Check your credit score: Lenders usually reserve the lowest interest rates for borrowers with good to excellent credit. If you need to improve your credit score, consider paying down high-interest debt and ensure there are no errors on your credit report.
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Apply for preapproval: Choose at least three lenders and apply for preapproval with each. This step usually involves submitting personal and financial details. The lender may also check your credit score to determine what rates you qualify for.
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Compare rates and loan terms: In addition to interest rates, consider closing costs, repayment length, and other benefits across the different lenders. Don’t be afraid to use a mortgage refinance calculator to get a sense of your new monthly payment.
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Negotiate fees: Talk with a loan advisor to see if there’s room to reduce loan fees. This is also a great opportunity to show your current lender that you have competitive offers to see if the company will match them.
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Choose the best offer: With multiple offers, you can choose the one that best suits your financial situation.
Learn more: How much does it cost to refinance a mortgage?
Refinancing with the same lender FAQs
Can I refinance with the same bank?
You can usually refinance with the same bank as long as you still meet the company’s requirements for a mortgage. The bank might even offer perks to returning customers.
Can you refinance with a different lender?
Yes, you can refinance a mortgage with a different lender. It’s usually a good idea to shop around and compare rates and loan terms with at least three lenders to ensure you’re getting the best deal. Having multiple offers also gives you leverage to negotiate lower closing costs.
Is it better to refinance with a current lender or a new lender?
There are advantages and disadvantages to both. Refinancing with your current lender can be simple and convenient. Your existing lender may also offer discounts for you to stay. However, you won’t know if you’re getting the best offer by sticking with the same bank. A new lender may offer lower rates or discounts to attract you as a new customer. Different lenders can also have distinct repayment options. At the very least, compare mortgage refinance offers from multiple companies to choose which is best for you.
This article was edited by Laura Grace Tarpley.
