Key takeaways

  • Refinancing can help you secure a lower interest rate, potentially saving you thousands of dollars over the lifetime of your loan.
  • Refinancing with your current lender may have benefits, like avoiding some of the fees associated with switching lenders.
  • While your current lender might offer competitive refinance rates and terms, it’s a good idea to shop around and compare offers from other lenders, too.

One of the biggest questions for someone who wants to refinance their mortgage is who to refinance with. If you’re thinking of refinancing to tap into home equity or change your loan terms, here are the ups and downs of going with your current lender versus one of their competitors.

Can you refinance with the same lender?

You can usually refinance with the same bank or lender that you originally got a loan through. But keep in mind, your mortgage lender is the institution that originated your loan, and that may be different from your current servicer.

Lenders are responsible for processing, underwriting and closing on your loan (among other things). However, these companies often hand over their loans to servicers, who oversee the day-to-day administration of your loan. This includes taking payments, tracking your balance and initiating the foreclosure process if you default.

Because servicers don’t offer their own loans, you’ll need to go through a lender if you’re interested in refinancing. If your mortgage is currently held by a bank or company that originates loans, however, they may be able to extend a competitive rate or terms on a refinance, even if another lender originated the loan.

Is it better to refinance with your current lender?

When deciding whether to refinance with the same lender or a new one, you’ll want to consider a few things.

If you’re just looking for the lowest rate, shopping around to get multiple quotes can help you choose the right mortgage refinance for your needs. Find the best rate and terms with different lenders and see if your current lender will match it. But be prepared to refinance with a different lender if cost is your number one priority.

“Most lenders want to keep their customers, most lenders want to preserve that relationship,” says Joel Kan, vice president and deputy chief economist at the Mortgage Bankers Association. “They want to keep the servicing of the loan.”

That means your current lender may be willing to waive some fees or match lower rates that a competitor offers, reducing your costs to refinance. But in general, shopping around is the best way to find the lowest rate. Think of it this way: If you don’t shop around, you won’t know whether your lender is offering you a competitive deal.

Advantages of refinancing with the same lender

  • Ease of application  – Your lender may already have some of your information on file
  • Ease of payment – You won’t have to learn a new way to log in and pay your mortgage
  • Account consolidation – If you already do all of your banking at the same place that holds your mortgage, you have fewer accounts to keep track of

Disadvantages of refinancing with the same lender

  • You may not get the best interest rate possible.
  • You may not get the lowest fees possible.
  • You may not get the best loan terms possible.

Why you should shop around for your mortgage refinance

Refinancing can help you secure a lower interest rate, which is a great way to decrease your monthly payment and the amount of money you spend on interest. But to find the best rate, you might have to look beyond your current lender.

“Shopping around for a mortgage is especially important when you’re refinancing,” says Jeff Ostrowski, Bankrate’s principal home lending writer. “After all, a prime goal of a refi is to save money. What’s more, your status as a homeowner with equity and a solid credit score could give you some leverage to lower fees.”

Shopping around and comparing offers is the best way to find the lowest refinance rates possible. This is true when rates are moving more erratically.

Comparison shopping is especially important when rates are bouncing around. Research from Freddie Mac shows that the savings from comparison shopping are amplified during times of rate volatility. — Jeff Ostrowski, Principal Writer, Bankrate

It might not sound like much, but even a slight reduction in your interest rate can save you thousands of dollars over the loan’s lifetime. Exploring your options also lets you find the loan that matches your goals and needs.

How to get the best refinance rate

Strategies you can use to get the best refinance rate possible include improving your credit score, buying points and shopping around with different lenders. While it may be easier to just go with your current lender when refinancing, you might be able to get a better rate — and save money — by going with one of their competitors.