Refinancing with the same lender may be easier since you already have an established relationship. The company has your information on file, including your payment history and financial details, which could simplify some of the documents required for refinancing. The short answer is yes, you can refinance with the same bank or lender, but this doesn't mean there aren't advantages to refinancing with your current lender. Discover Home Loans keeps existing information on file for previous loans that its customers applied for, which can move the refinancing process forward at a faster pace.
However, refinancing should take just as much effort regardless of the lender you use, as documentation and qualification requirements are largely based on the type of loan you are using. To determine if you may qualify for a refinance loan, ask your lender how much you still owe on the original mortgage and find out how much your house is currently worth. If you owe more than your home is worth, you probably don't qualify for a refinance. The bank will ask for proof of income in the form of pay stubs, W-2 forms, and income tax returns, as well as current bank and credit card statements.
Your lender will also want to know the details of any other debt, including auto loans, home equity loans, or home equity lines of credit. Yes, you can refinance a personal loan with the same bank, but not all banks allow it. If you can get a lower interest rate than your original loan, there are minimal fees, and you can't get a better offer from another bank, then it makes sense to refinance the loan with the same bank. When looking to refinance, remember that your lender or loan servicer knows your current interest rate. The best way to lower the interest rate on a personal loan is to refinance it with another lender. Some lenders offer “no cost” refinancing which generally means that you'll pay a slightly higher interest rate to cover closing costs.
It's also important to consult a tax advisor for individual information on the impact of refinancing on your taxes. A common mistake homeowners make when looking for a refinance loan is to just look at interest rates. And yes, this is true even if your new monthly mortgage payment will be lower thanks to that lower interest rate after refinancing. If your score has dropped too low since you first applied for your loan, you may not qualify for interest rates low enough to make refinancing your loan a wise financial decision. However, some homeowners whose homes have fallen in value since the date of purchase may find that they will have to pay PMI for the first time if they refinance their mortgage. When considering refinancing options it's important to set goals to determine which mortgage product meets your needs. Choosing to refinance with the same lender may seem like the simplest and most streamlined solution to replace your current mortgage but there are many things to consider before taking that step.
Holden Lewis, financial advisor at Bank Rate suggests considering refinancing the loan for a shorter term if your budget can afford it. Lenders even employ “retention” staff whose job is to prevent borrowers from refinancing with other mortgage lenders. Conventional wisdom says you'll need 20% to refinance with a conventional loan but in fact, you'll only need 20% if you want to avoid paying for mortgage insurance or plan to refinance with cash withdrawal. However, you could see lower closing rates if you refinance with the same lender as lenders recognize that they can lose if you take your business somewhere else.