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Mortgage Refinancing

Should I Refinance with my Current Lender?

While you shouldn't blindly refinance with your current lender just because it's easier, it's not a bad place to start.

On Behalf of Veitengruber Law | May 06,2022

Refinancing your mortgage with the same lender can save time that would have been spent finding a new lender. The promise of less paperwork to fill out is also appealing. This is often the path of least resistance when it comes to refinancing—but is it your best option? If you are looking to get the best deal, you may need to shop around and go with a new lender. Here are some pros and cons to consider when trying to determine if you should refinance with your current lender.

Pro #1: You'll Save on Closing Costs.

In order to keep your business, your current lender may waive or reduce closing costs. Closing costs when switching to a new lender can be hefty depending on the kind of deal you get. If you are not prepared to pay for closing costs, you may want to consider staying with your current lender.

Pro #2: You'll Zoom Through the Process Quicker

Your lender already has all of your information and knows who you are as a borrower. If you stay with your lender, you will have to fill out less paperwork and provide less documentation. This can speed the process up a lot and ensure you are saving money as soon as possible.

Con #1: You May Not Get the Best Rate

Your lender knows what interest rate you currently pay. They may be willing to lower your rate—but they may not be offering the lowest rate you could possibly get elsewhere. A rate difference of even half a percent can have major implications for how much you will pay over the life of the loan.

Con #2: You Lose Negotiating Power

Because your lender already knows your current loan terms, they will start negotiations based on this information. They may not offer the best deal they possibly can because they know what you are already paying. Other lenders are trying to get your business and will therefore be more willing to put their best foot forward in making an offer. Your lender knows they just have to make a better offer than what you currently have.

There are certain things you can do to negotiate better terms with your lender.

First, inform your lender you are shopping around. If they know you are exploring other lenders, they will make a more competitive offer in order to keep your business. When you are finally ready to negotiate, bring three to four other loan estimates to the table. If you know what is out there, you can better negotiate with your current lender for a similar deal. Finally, before you start the process of refinancing, make sure your credit score is as high as possible. A higher credit score will allow you to receive the lowest rate available.

So while you should not blindly refinance with your current lender just because it seems easier, it's not a bad place to start. If you go into the negotiation informed about your possible options, you will have the best chance of getting a deal that could save you thousands of dollars over the life of your loan.



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