Should you refinance your mortgage with your current lender? How do you go about that? Here's what to know.
Can you refinance with your current lender?
If you're looking for a new mortgage, it is possible to refinance with your current lender. Refinancing simply means paying off your existing loan and replacing it with a new one with better terms. Generally, that means a lower interest rate on your mortgage. You can also change the length of your repayment period when you refinance. For example, you could go from a 30-year mortgage to a 15-year loan and pay off your home in half the time.
To refinance with your existing mortgage lender, let your lender know you're interested in getting a new loan. Your lender tells you what information to provide to get approved for a refinance. Generally, you need to supply your lender with recent pay stubs, bank statements, and tax returns. Your lender also runs a credit check to see if your credit score has changed since you signed your original loan.
Keep in mind that your current lender may reject your mortgage refinance application. That may seem strange -- after all, they approved you for a mortgage loan in the past, and you are paying it off. But while your lender can't take your existing loan away if, for example, your credit score plunges, it can deny you a new mortgage loan.
Is it better to refinance with the same lender?
Refinancing with your current lender has its benefits. Since you already have a relationship with that lender, if your mortgage is in good standing, your lender may be better able to offer you a lower interest rate on your refinance. Your lender might also offer you lower closing costs on your refinance, which saves you money as well.
That said, it always pays to shop around with mortgage refinancing lenders to see what offers you get. Your current mortgage lender may not be able to offer you the most competitive rate on your loan, or the lowest closing costs. Getting a few offers helps you reap the most savings in your mortgage refinancing.
Will refinancing with my original lender save me money?
In some cases, you may save money with a refinance loan from your current lender. If you're a borrower with an account in good standing (meaning you're up to date on all payments), your lender is more likely to offer you an attractive new mortgage with a low interest rate.
You may also be able to use offers from other lenders to negotiate with your current lender. For example, if your current lender offers you a great interest rate for refinancing but higher closing costs than you can get elsewhere, you can ask for lower lender fees to seal the deal. Because your lender knows you and may be motivated to keep you on as a borrower, your lender may come down on refinance closing costs.
Refinancing a mortgage could help you lower your monthly payments and save money on interest in paying off your home. And in many cases, using your current lender for your refinance makes sense. Ultimately, gathering offers is the best way to know if you're getting a good deal on a refinance.
Either way, before you agree to a refinance offer, use a mortgage calculator to see how much savings you get compared to your original loan. Make sure you're lowering your monthly payment enough to compensate for the closing costs you're charged up front.
With today's refinance rates sitting near record lows, now might be the right time to replace your existing mortgage with a new one.
Still have questions?
Here are some other questions we've answered:
How much could I save by refinancing?
{{ calcResult }}
Fill out the inputs to see how much you can save in total and in monthly payments with a refinance
{{ result.msg_monthly_payment }}
$ {{ result.monthlySavings.toString().replace('-','') }} / Month
The new monthly payment would be:
$ {{ result.newMonthlyDisplay }}
{{ result.msg1_total }}
$ {{ result.totalSavingsDisplay.replace("-","") }}
{{ result.msg2_total }}
The Ascent's best mortgage refinance lenders
Refinancing your mortgage could save you hundreds of dollars for your monthly mortgage payment and secure you tens of thousands of dollars in long-term savings. Our experts have reviewed the most popular mortgage refinance companies to find the best options. Some of our experts have even used these lenders themselves to cut their costs.
FAQs
-
Absolutely. In fact, you may have an easier time refinancing with your existing lender, because you already have a relationship.
-
In some cases, yes. Using your current lender to refinance might result in more favorable terms on your new mortgage. But it still pays to shop around with refinance lenders and see what loan terms they offer.
-
In some situations, you save money if you stick with your current lender. But that isn't always the case, so shop around to find out whether you're getting a good deal from your existing lender.
About the Author
Maurie Backman is a personal finance writer who covers topics ranging from Social Security to credit cards to mortgages to REITs. She also has an editing background and appears on live podcasts to talk about financial matters.
Share This Page
We're firm believers in the Golden Rule, which is why editorial opinions are ours alone and have not been previously reviewed, approved, or endorsed by included advertisers. The Ascent does not cover all offers on the market. Editorial content from The Ascent is separate from The Motley Fool editorial content and is created by a different analyst team. The Motley Fool has a Disclosure Policy. The Author and/or The Motley Fool may have an interest in companies mentioned.
The Ascent is a Motley Fool service that rates and reviews essential products for your everyday money matters.
Copyright © 2018 - 2022 The Ascent. All rights reserved.
About The Ascent
Legal