Can You Refinance With Your Current Mortgage Lender? Pros and Cons

Can You Refinance With Your Current Mortgage Lender? Pros and Cons

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If you’re looking to lower your monthly mortgage payment, refinancing with your current lender could save you the hassle of switching financial institutions, filling out extra paperwork and learning a new payment system.

But before you sign on the dotted line, it’s smart to shop with multiple mortgage companies to get the best refinance rate. After all, hefty savings may make it worth it to change lenders.

Can you refinance with your current lender?

You can refinance through your current lender — provided you qualify — because financial institutions generally want to keep their customers.

The latest Mortgage Monitor Report from Black Knight, a leading provider of public property data, shows that just 18% of homeowners in the first quarter of 2019 stayed with their current mortgage company after refinancing. The data cites a refinance market in which competition for your business is rising.

Is it cheaper to refinance with your current lender?

The upfront cost of a refinance can be substantial, so savvy homeowners should shop around to see if their current lender offers the best deal. Obviously, you won’t know until you get several estimates (more on that later).

You have likely built a relationship with your lender, so they’ll know your track record on payments. This may give you leverage to get discounts or special rates, especially if you have excellent credit and a record of on-time payments.

Pros and cons of refinancing with your current lender

ProsCons
Quicker, easier loan processLender knows your current rate
Possible break on closing costsCan’t skip rate-shopping
Could negotiate better termsMay need to go through underwriting again
Rewarded for being loyal customerCould lose out on better service elsewhere

The average closing costs on a mortgage refinance total $4,345, so any savings your current lender offers you makes refinancing even more worthwhile.

Since they already have your payment history on file and may have already completed an appraisal on your property within the last few years, your current lender has already completed much of the legwork that a new lender might require. As a result, you may be able to avoid some of the customary fees that new lenders might charge.

Advantages of refinancing through your current mortgage lender

These are some possible benefits of refinancing through your current lender:

  • The process may be quicker and easier. Your current lender already has your information in its system and knows your history.
  • Your lender may waive or cut some closing costs. If you refinance with your current lender, you may be able to get a break on certain closing costs, such as the appraisal fee.
  • You may be able to negotiate better terms. You have likely already met with your lender and its loan officers, which could give you leverage when trying to refinance.
  • Customers may get a discount for having multiple accounts. Certain banks offer rate discounts for customers with existing checking or savings accounts. Other banks offer rewards points for their credit cardholders who get a mortgage.

Disadvantages of refinancing through your current lender

These are some of the downsides to refinancing with your current lender that you may want to consider before you ask about a loan:

  • Your may not get their best offer. Your lender knows your current rate, so it holds the upper hand. In fact, it may bank on offering you a rate that’s just slightly lower than what you’re currently paying — but not the best rate you could get by shopping around.
  • You still need to rate-shop. Going with your current lender may not be as simple as it sounds. Remember to show your lender that you’re serious about getting the best rate by getting estimates from other lenders.
  • You may get fully vetted like a new customer. Your current bank may require you to go through a full underwriting process despite your current status, especially if several years have passed since you took out your mortgage.
  • Switching could get you better service. Customer satisfaction with mortgage servicers in 2019 averages 777 on a 1,000-point scale, according to research firm J.D. Power. If you don’t like your current mortgage servicer, switching lenders could save you future hassle.

How to get the best mortgage rate with your current lender

A refinance requires time, effort and money, so you want to make sure you’re getting the best return on your investment. Here are some steps to follow to shop around for a mortgage refinance when you want to include your current lender in the mix.

Make sure refinancing is right for you

Refinancing can be a great way for homeowners to save money on a mortgage. However, refinancing may not be the best choice for you if you’ve been in your home a long time, you’ve got a prepayment penalty on your current mortgage, you’re planning to move in the next few years or your credit score has plummeted since you got your current mortgage.

Get multiple quotes from other lenders

Getting other estimates first will give you more leverage and show your current lender that you’re serious about getting the best deal — not just a better deal than what you have now. You should get a Loan Estimate from each mortgage company.

This document will lay out all the costs involved in the refinance, including the interest rate, monthly payment and closing costs such as application fee, origination charge and underwriting cost, allowing you to easily compare loan offers. Note that multiple credit inquiries for a mortgage refinance will likely be treated as a single request.

Compare Loan Estimates to your current mortgage rate

Crunch some numbers to see how much you could be saving, both per month and over the life of the loan. Be wary of no-closing-cost refinances as the interest rate may be higher and you will likely pay more overall.

Visit your current lender with quotes in hand

If possible, go see a loan officer in person and bring your refinance Loan Estimates from the other lenders. While an in-person meeting might feel old school, it gives you a chance to talk to your lender and negotiate face-to-face. Ask about any special offers, see whether any closing costs can be waived and get a Loan Estimate. Lenders typically employ retention loan officers to help in this kind of situation.

Compare other quotes to the refinance offer from your current lender

Don’t commit under pressure. Instead, take time to go home and compare quotes. If your mortgage company has offered you a comparable or better deal, then getting a refinance with your current lender may make the most sense.

By taking extra time to shop around, you should be able to rest easy knowing you did everything you could to find the best possible refinancing deal.

Kenny Zhu

Kenny is a Banking and Mortgage Research Analyst for ValuePenguin and has worked in the financial industry since 2013. Previously, Kenny was a Senior Investment Analyst at PFM Asset Management LLC. He holds a Bachelors of Science from Carnegie Mellon University, where he majored in International Relations & Politics. He is a CFA® charterholder.

Editorial Note: The content of this article is based on the author’s opinions and recommendations alone. It has not been previewed, commissioned or otherwise endorsed by any of our network partners.

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LendingTree can help you find and compare mortgage rates, all without affecting your credit.
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on LendingTree's secure website. NMLS #1136: terms and conditions apply