Changing Mortgage Lenders

September 19, 2021

Why Would I Change Mortage Lenders?

Two common reasons that home buyers may wish to make the change would be to get a better loan, or you have experienced poor customer service from a past lender.

You Can Potentially Find a Better Loan and Save Money

It may be a good idea to switch because interest rates are changing, and the borrower is looking to receive a lower rate than what the previous lender offered. Before making this change in your mortgage process, take the time to evaluate all the loan costs disclosed in the APR. By assessing all costs, you will find out if you will actually be saving money.

The home buying process isn’t always easy to navigate. Therefore, you should take the time to understand your rates and associated costs before closing on a mortgage. This will help avoid any confusion down the road if you find a better mortgage rate or choose to refinance.

What Is The Process To Change Lenders?

Get your mortgage pre-approved by the new lender before you completely switch lenders. This process can be brief and should be accomplished before you make an offer. This should be a familiar process if you have previously received a mortgage. This process will need to be repeated if you choose to find another lender.

Be honest with your current lender and express your concerns to them. Let them know the reason that you are leaning towards finding another lender. Sellers can get curious about your ability to get a mortgage if they don’t hear about the change from you directly.

The seller may be concerned if you decide to make the change from a conventional to an FHA loan because of the FHA’s stricter appraisal process. Communication with the seller is key during the overall home buying process.

Am I able to Switch Lenders After I Close?

It is possible for lenders to sell the borrower’s mortgage to an investor or other mortgage servicer immediately after they close on the house. This process will free up their capital and helps them keep funds liquid. As a borrower, is possible that you are content with your lender and their customer service, and you might be sad to find out that you will not be working with them after the mortgage has been sold. The only way to change servicers is to refinance. This process comes at a price.

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