Refinancing with your current lender is usually a mistake

Mortgage and Lending with Cambria Mortgage NMLS 274132

Thinking of refinancing?  Been contacted by your current lender?

Your current lender sounds like a logical choice to refinance. Many people believe that "because they know you" that somehow the current lender can refinance you quicker, cheaper, and faster.

You couldn't be more wrong. 

Best Refinance

There is no short cut to the refinance process with your current lender. Most people get very standard loans. Fannie Mae, Freddie Mac, FHA loan, VA loan, and USDA loan guidelines are the same with all lenders. Therefore all lenders still need to do everything all over for your refinance, including your current lender.  You still need to sign the same application forms, and submit the exact same documents. Your application still needs to go through underwriting, there still are closing costs, title companies, and everything else. They can't magically shorten the process.

Mortgage loan Interest Rates

Ever notice mortgage interest rates from all banks and mortgage companies are basically the same? That is because mortgage loan interest rates are based on the mortgage back securities bond market. A simple way to look at this is that all lenders pay the exact same cost for the loan, then add a profit margin.  Just like any retailer who buys a product, puts it on the shelf, and sells it to you.

 All mortgage companies and banks have the same costs to do your loan. Appraisals, title company fees, state taxes, recording fees, etc. All lenders need the exact same people to manage the loan, from Loan officers, loan processors, underwriters, and back office staff who all get paid.

Therefore they can't magically give you a better deal because you are an existing customer. But they can, and do say things to you that make you feel otherwise. It is common for them to say things to you like you'll get an preferred, or existing customer discount. Sounds great, but it is usually meaningless, and only designed to get you to not call anywhere else. 

As a matter of fact, because so many people only call their existing lender, you almost NEVER get the most competitive rates - because they don't have to. You just assumed they were good.

Fake No Appraisal or No Closing Costs Statement

Along with the fake typical existing customer discount statements, are two BIG LIES that many banks like to say:

FAKE NO APPRAISAL GAME: Understand, all lenders underwrite to the same guidelines. Most mortgage refinance loans need an appraisal, but some automatically don't, like FHA and VA streamline refinances. For everyone else, the AUS computer (automated underwriting system) determines if you need an appraisal or not, and no lender knows if you do or don't until they run your application through the computer. If the computer says you need or don't need an appraisal, it is the same answer with every lender. If you qualify for an appraisal waiver (no appraisal), it isn't anything special they did, but is used to fool people everyday.

FAKE NO CLOSING COSTS: This also goes for "low" closing cost games. THERE IS NO SUCH THING AS A NO CLOSING COST LOAN. All mortgage loans, including all refinance loans have closing costs that need to be paid, and the person paying them is always YOU.

There are mortgage rules for ALL lenders that state no mortgage lender can give any one customer a better deal than the next. Lenders must set a margin, and make that margin on all deals. So to lower closing costs (giving you a deal), then the bank MUST increase the interest rate to offset any closing costs not collected up-front.

Lower closing costs in exchange for a higher rate, and for that matter, paying higher closing costs and discount points to buy down to a lower rate, are not automatically a good or bad thing. You just need to be aware how it works, and not fall for wild claims your current lender is somehow better.

The Bottom Line.

If you are looking for the best deal in a refinance, dealing with your current mortgage lender is almost never the best deal.  Instead, call your local non-bank lender, or the mortgage broker who gave you the original loan.


Experience the Cambria Mortgage difference by calling (651) 552-3681, or visiting

Cambria Mortgage, Joe Metzler


YES, the counter top people! Equal Housing Lender. NMLS 274132, 322798. Cambria Mortgage lends in the following states: MN, WI, SD, ND, IA, This is not an offer to lend or to extend credit, nor is this a guaranty of loan approval or commitment to lend. The information here may not be up-to-date and may no longer be accurate. Products and interest rates are subject to change at any time due to changing market conditions. Actual rates available to you may vary based upon a number of factors. Consumers must independently verify the accuracy and currency of available mortgage programs. All loan approvals are subject to the borrower(s) satisfying all underwriting guidelines and loan approval conditions and providing an acceptable property, appraisal and title report. (C) 2021 Joe Metzler


Comments (1)

Dan Hopper
Dan Hopper - Gold Way RE - Westminster, CO
Denver Broker / Real Estate Advocate

Interesting thought on refinancing ... we have seen it work well both ways for many of our past clients.  So, it's possible to get good service from the right lenders / investors.  Key is to shop it!!

Jan 02, 2021 09:52 AM