Refinancing With Your Current Lender Is NOT Always Easier

Searching for a competitive mortgage rate and terms can certainly be challenging in today’s lending world. Mortgage rates are presently at historic lows and there is even greater opportunity to aggressively pay down your mortgage balance. So where do you go to secure the best possible interest rate on that new mortgage loan?
Well…banks create a perception to their customers that because they are servicing the customer’s home loan already the process of refinancing will be made easier by just working directly with them. This is nothing more than a clever sales pitch.

What do you mean refinancing with my current lender is not easier?

It also does not benefit them. Think about it for a second. Let’s say you are paying 5.5% on your 30 year fixed-rate mortgage and your balance is somewhere around $200,000. This means your bank is making roughly $11,000 per year off of the money they lent you. You have an opportunity to refinance to a new 30 year fixed-rate mortgage for $200,000 at 4.375%.

If you go back to your bank and complete a refinance with them they lose money. The reason for this is because they are being “paid off” and they’re no longer going to be collecting higher interest rate payments from you. This means they lose and you win.

If you refinance with your current lender they will still need all forms of documentation so it is not easier.

Make no mistake your bank does not want to lose your business. Your bank will help you do the new refinance, but only because they want to retain you as a customer and offer you checking accounts, credit cards and other ancillary banking services. They know that you’re going to refinance the loan anyway so they figure they might as well to it themselves.

Just because you are making your payment to them every month does not make refinancing with them any easier. Why is this the case? It’s because all new mortgage loans being originated today must have two years of federal income tax returns, two years of w’2’s with a full financial package including credit and assets. I can promise you your loan servicier does not have all of your financial documentation readily available at their fingertips. So therefore the process with them is the same as it would be if you went elsewhere.

Refinance your home mortgage loan with a different lender for the best results.

Since you’ll need to be gather a full list of financial documentation here is a link to the home loan documentation checklist that you can take to use with any lender of your choice.

Get a second opinion. If you are presently working with your bank and live in Santa Rosa, Petaluma, Windsor, Healdsburg or any other Sonoma County city and are looking to refinance give me a call Scott Sheldon at 707-217-4000. I can show you why refinancing with your current lender might end up costing you more money and time.

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RELATED MORTGAGE ADVICE FROM SCOTT SHELDON

When buying a home, it’s natural to want the lowest mortgage rate possible. But sometimes, chasing a slightly better rate from another lender—especially after your offer has already been accepted—can backfire in a big way. Let’s walk through a real-world scenario. You’ve got an offer accepted on a house. You’re working with a lender who has you approved, documents in underwriting, and a 21-day close of escrow in place. Everything is moving forward. Then you hear from another lender offering a rate that’s 0.25% lower, with slightly better closing costs. It’s tempting. But before you make a jump, here’s what you need to consider. Switching Lenders Comes with Time Costs When you pivot to a new lender mid-contract, they’ll need to: Re-underwrite your entire loan, Order a new appraisal, Disclose and sign new loan documents, Submit the file for final loan approval, Schedule and fund closing—all over again. This doesn’t happen overnight. Even in ideal circumstances, the new lender is likely going to need at least 25–30 days to close. If you’re in a fast-moving or competitive market, this is a real problem. Most sellers won’t grant a contract extension just because you’re switching lenders. So, what happens next? A Contract Extension Can Jeopardize Your Deal Asking for a contract extension means the seller must agree to delay closing. But that delay introduces risk—especially if the seller has backup offers or simply wants certainty. They may not grant the extension. Or worse, they could cancel the deal outright and take another buyer’s offer. Even if the seller agrees to extend, your earnest money and negotiation power could take a hit. And for what? A slightly lower rate that might save you $50 to $75 a month? Mortgage Rates Aren’t as Far Apart as You Think Here’s the truth: all mortgage lenders get their money from the same place—the bond market. The pricing differences between lenders usually range from 0.125% to 0.25% in rate on any given day. If one lender seems to be offering dramatically better pricing, the first thing you should ask is: How? Head over to FreddieMac.com and check the average 30-year fixed rate posted weekly. This is one of the most reliable benchmarks for where rates truly stand in the market. If a lender is quoting you a rate that’s well below that average, ask for the details: Are they charging extra points? Is this a teaser rate with a prepayment penalty? Is it based on a different loan product or risky structure? Often, what sounds “too good to be true”… is. Consider the Bigger Picture Think long-term. If you’re financing $600,000, a 0.25% lower rate may reduce your payment by roughly $75/month. But what if you lose the house and have to start over? That monthly savings doesn’t mean much if you’re outbid on your dream home or lose your deposit. Also, remember: you’re not going to keep this rate forever. Today’s homebuyers typically refinance when rates drop by about 0.75% or more. So if rates fall within the next year or two, you’ll likely be refinancing anyway. Instead of paying extra points now or risking the entire deal for a minor monthly savings, it may be better to accept a slightly higher rate—knowing you’ll refinance when the time is right. The Real Risk Isn’t the Rate—It’s the Delay When shopping for a home loan, don’t just ask, “What’s your rate?” Ask: Can you close on time? Is this rate sustainable or based on hidden costs? Will switching lenders delay or jeopardize my contract? A home purchase contract is a binding agreement between you and the seller to perform within a set timeframe. If you can’t meet those dates because you're chasing a slightly better rate elsewhere, you may want to reconsider if now is the right time to buy. Final Thoughts Yes, interest rates matter. But execution matters more. Before making a switch mid-transaction, talk to your lender. Have an honest conversation about pricing, timelines, and strategy. You might find that staying the course, securing the house, and planning to refinance later offers a better path to financial security. Want to Know Your Options? Let’s compare rates and strategies the smart way—without risking your dream home. 👉 Click here to get a custom rate quote today.

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3 Comments

  1. […] It’s an even better time to refinance. […]



  2. […] mortgages are quite competitive right now, many are seeking 15 year fixed-rate mortgages. You can actually can obtain a 15 year fixed-rate mortgage loan under 4%. Homeowners looking to […]



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