There’s no one answer to this question that’s right for everyone. Refinancing with the same bank is a good option for some homeowners. For others, it may be more beneficial to refinance with another lender. Whether you should or not depends on a few different factors.
Pros of Refinancing Your Mortgage with The Same Bank
Refinancing with the same lender offers these advantages:
You could save money on lower closing costs – Mortgage closing costs can add up to about 2% to 5% of the total loan amount. This includes the origination, home appraisal, underwriting, title insurance and mortgage insurance fees. If you’ve been a responsible customer, the bank may waive some fees or offer a discount on the total closing costs. To them, it’s worth losing some money to retain a good customer.
The process will be simpler and faster – As an existing customer, the bank has your financial details and payment history on file. You may need to submit your latest income and tax information. This will accelerate the process and you could close the refinance in less than the 45 days it usually takes.
Cons of Refinancing with Same Bank
You can lose out on potential savings – Your lender knows your current interest rate and may offer marginally lower rates as an incentive. This discounted rate may be higher than rates offered by other refinance lenders. Take time to shop around and compare rates and terms offered by other lenders before signing. This will give you the power to negotiate a better deal with your bank. If your bank can’t match the rate offered by another lender, you’re better off changing lenders anyway.
The Bank may not have capacity to accommodate the refinance – Homeowners rush to refinance when interest rates are low. On average, banks take about 45 days to close a refinance, it may take longer if several are being processed. This delay may not work for you if you need the money urgently.
Final Thoughts on Refinancing Your Mortgage with The Same Bank
When refinancing a mortgage, it’s best to first compare lenders, rates, terms, and closing costs. Don’t get stuck on refinancing with the same bank. It may or may not be the best option for you but you’ll never know unless you take the time to shop around.
Connect with a financial planner to help you make a more informed decision.