Before acquiring a loan, most people consider numerous lenders and compare their reviews, fees, and, most importantly, their interest rates. However, while selecting a creditor, you must not forget your relationships with him if you have obtained a loan before as well. But, if you find a loan officer for the first time, you must choose one cautiously whom you can trust and walk long-distantly. Not only trust, but you also want someone who offers the most appropriate interest rates and guides you through everything regarding mortgage.

Nevertheless, if you have the only mortgage creditor from the first day you purchased your home, and some circumstances occurred between the two, now you want to change your mortgage lender, what would you do?

Well, this isn’t the only case; many homeowners want to change their lenders for multiple reasons. If you also want to change your creditor but you’re unaware of how to do this, this article is a must-read for you which comprises everything you need to know.

Reasons you Need to Change your Lender

There are two possible reasons for considering changing your mortgage lender such as:

Customer Dissatisfaction

One of the foremost reasons you consider switching your mortgage lender is that you are dissatisfied with your creditor and look for some other reliable lender. Your dissatisfaction may include poor customer services such as illogical delays, lost documents, frequent changes in the mortgage contract, and unresponsiveness within the association.

Offering of a Better Deal

Another reason to change your lender is that you have found a better deal, and now you don’t want to miss that deal. Suppose the interest rates have been changed, and you want a lower interest rate offer than your creditor is actually offering, but the process has been approved. In this situation, you consider changing your lender and get to the lender with a better package. However, by evaluating all your costs, you can decide if you want to save money or waste it on paying the high interest rates.

Can I Switch my Mortgage Lender?

You are saved by the consumer protection rules that enable you to get rid of a loan before it is dealt out. Nonetheless, once your loan is issued, you would not be able to easily switch your creditor to a different one.

The potential home purchasers are allowed to change their lenders to any point of the process while buying their home before the process starts. Once the mortgage service and repayments process has been initiated, there is only one way left to change your mortgage provider, which is by refinancing the mortgage.

How Lender Switching Works?

Lender changing can only happen if you get pre-approved by your creditor. This process is pretty faster than you may think, and it gets completed before the offer is made. However, if you already have a mortgage and have experienced this pre-approval process before, you need to repeat this process if you consider changing your lender.

When you are searching for a new creditor, you must be clear about the reason for the lender changing with your mortgage officer and the seller because they may become doubtful of your eligibility to acquire a loan. Moreover, you must provide a new pre-approval letter to your mortgage officer or agent who is involved in your lender-changing process.

Assume you are buying a new home and you are obtaining a new mortgage; the home sellers might be upset about your lender switching from traditional to FHA loan because this loan type is severer than the prior one. Eventually, you need to clear about your intentions as well and interact early and frequently.

Downfalls of Changing your Mortgage Lender

Before considering and deciding to change your mortgage lender, you must know that there are always some risks in this process that shouldn’t be ignored.

You May Need to Get a New Assessment If your first creditor has already conducted the evaluation, but he does not work with your new lender, then you may need to perform the assessment again with your new lender. In that case, you would need to pay for the entire evaluation process again. A recent evaluation is an extra cost to you, and it is considered very reliable before picking a new lender to work with.
Your Lender Would Take Hard Investigations If your new lender conducts complex investigations on you, it will negatively affect your credit score, and your credit score would become low. Lowering the credit score would result in the reduction of your credit bracket and raise your interest rates. Hence, if your new creditor takes investigations on you, you must take it seriously and try to meet his requirements.
Risk of Losing your Home Once your offer has been approved and you change your lender, you may encounter the only risk that you would face difficulty to close on time. If the seller wants to close the deal fast and you delay these closings, you would be at risk of losing your home.

Switching Lender after Closing

Some creditors may sell your loan instantly after closing is done. You might have been satisfied with your previous lender and his services, but hear that you won’t be able to walk with him anymore because he has sold his mortgage, you can refinance your debt. There is a chance to end up with the same lender with refinancing, but it is not guaranteed.

Bottom Line

If you want to change your mortgage creditor, you must be pre-approved. Although there are some disadvantages of switching your lender, in case you are stressed with your current lender, or you get a better deal, you can go for this process. However, be evident with your reasons for lender switching. Also, keep in mind, once your process has been approved, the only way to change your creditor is by refinancing your mortgage.