Is it better to refinance with your current mortgage lender? Loaner

If you already have a mortgage, you might be curious to refinance, and more precisely if you need to use your original lender.

Or if it is better to use them in relation to another option. Let’s talk about this to better understand how it all works.

And why it might be logical to look beyond your current bank / lender instead of using them again.

Of course, loyalty can be a good thing, but with regard to mortgages, it can be more advantageous to go around.

This is particularly true if a lender contacts you before even devoting time to doing your own research.

Can you only refinance with your current lender? FAKE!

First of all, let’s release a great myth. You may have heard, or worse, you have been informed that you can only refinance with your current lender.

This is not true. So someone is doing a problem or you may have been poorly informed. Anyway, know that you can refinance with any bank or lender ready to work with you.

The same goes for any mortgage broker, assuming that you have used one in the past. Or even if you didn’t do it.

For example, let’s say you have obtained your current mortgage with Bank A and now you want to refinance.

You can return to Bank A, or you can go to Banque B, or a mortgage broker A, or a mortgage broker B. or even a credit cooperative C.

The options are quite limited here. And any combination is possible.

So if you used a bank originally, you can use a broker for refinancing. Or vice versa.

The same is true if you originally went to a box and you now wanted to try a broker or a bank. Or an online lender who uses AI.

As long as you are eligible for a mortgage with said bank, broker or credit cooperative, there should be no restrictions.

Note: Your current lender can tell you that you cannot refinance for X for time. This usually has to do with their commission reuptake if the loan is reimbursed too quickly.

This will not affect you, but it is true that they could have their recovered committee if you refinance within two months or less.

If this is the case, you can wait as courtesy, but there is no obligation to do so if you are worried that rates can increase.

Do I have to refinance with the same mortgage lender?

Now that we know that it is possible to refinance your mortgage with the same company or another, the next obvious question is that you should?

Well, it depends. First and foremost, did you like the company or the broker you have used in the past?

Have they provided excellent customer service? Have they closed your loan in time? Was the mortgage rate competitive? What about fence costs?

If you were satisfied in the past, you should certainly give them the opportunity to provide a refinancing quote.

However, this does not mean that you should use them again. Even if they were absolutely stellar, their price may not be competitive.

This is particularly relevant if it is a refinancing, as savings are generally the impulse of the transaction.

Although there may be a discount or waiver of the costs to use them a second time (think of the Better Forever program), the interest rate and the APR mortgage are what is important.

If your former lender cannot beat the other quotes you get, they might not have luck, even if they were easy to work and very competent.

You should not feel the need to use them again, especially if it costs you more money every month, potentially for the next 30 years!

Of course, if they are the best option in terms of price, or very close, to choose them for peace of mind and / or the ability to finance the loan could be the tilting point.

After all, you will want to know that you are in good hands with someone capable of closing, otherwise the promise of a lower rate could be meaningless.

(What about a modification of the mortgage rate?)

What happens when you refinance with another lender?

When you refinance your mortgage, it is paid with the product of the new loan. It’s a bit like making a giant payment that completely extinguishes the old loan.

For example, let’s say that you have a current loan balance of $ 250,000 and that you want to obtain a lower mortgage rate via a rate of rate and long -term refinancing.

You apply with a new lender because they offer a much better price / fresh. When new loans finance, the product reimburses the loan balance of $ 250,000 existing.

Then you have a whole new loan with your new bank and start making them payments instead.

In the case of a resting of rest, you will end up with a higher loan amount, with any amount borrowed beyond the old loan balance from your available domestic capital.

For example, your existing loan is $ 250,000 and you want $ 100,000 in cash. The new lender reimburses the loan balance of $ 250,000 from the former lender and gives you an additional $ 100,000.

You now have a loan balance of $ 350,000 with the new lender, who will have to be paid monthly.

Of course, most of the time, your loan will be sold shortly after its origin anyway, so it is even that it is not even with the same company that you are used to getting it.

For example, I had mortgages that I obtained with a mortgage broker who was finally sold at Bank A, even if I have never used Bank A to obtain a mortgage.

But if and when I refinance, my new mortgage lender will reimburse the loan held / maintained by Bank A.

This also explains why mortgage companies want you to refine so badly. They often no longer have the loan; So if you use them again, they can always earn money even when offering a lower rate.

Lenders are trying to resume mortgages now more than ever

A last thought to consider. The loan volume has been taking shape considerably in recent years, lenders have become more and more desperate to keep their former customers.

As indicated, loans are often sold shortly after assembly, so your loan agent, broker or original mortgage company could earn money if you refinance with them, whatever the new conditions.

And now that there is very good technology available, they can use their customer database daily to find prospects using current mortgage rates, your existing rate rate and loan, etc.

Mortgage brokers do this even, with the best UWM lender deploying a program called Keep to get Relevant Business.

This means that you are more likely to be bombed by your original lender in the future, which potentially makes research elsewhere.

Of course, these lenders could extend a mediocre offer if they are the ones who reach out, as opposed to you, actively putting time to shop.

So take the time to collect a few quotes to make sure you don’t miss a better deal. You might even be able to negotiate with your former lender and make the most of the two worlds.

In short, with refinancing, you simply get your loan refunded in full via the product of the new loan.

It doesn’t matter who holds the old loan other than knowing who this company is to receive the product to repay your old loan.

Read more: The refinancing process step by step.