Changing mortgage lenders may seem tempting, especially if you’re not happy with your current lender. However, it’s important to weigh the pros and cons before making a decision. Here are the top 3 reasons to avoid changing mortgage lenders:
1. It Can Affect Your Credit Score
When you apply for a mortgage, your lender will pull your credit report to determine if you qualify for a loan. This is known as a hard inquiry, and it can lower your credit score by a few points. If you apply for a mortgage with multiple lenders, you’ll have multiple hard inquiries on your credit report. This can significantly lower your credit score and make it harder to get approved for a loan.
Additionally, if you switch lenders in the middle of the mortgage process, your new lender will need to pull your credit report again. This will result in another hard inquiry and can further damage your credit score. In the end, changing lenders can hurt your credit score and make it harder to get a mortgage.
2. It Can Delay the Mortgage Process
Switching lenders in the middle of the mortgage process can also delay your loan approval. Each lender has their own criteria and process for approving a loan. If you switch lenders, you’ll need to start the process over and provide all the necessary documentation again.
This can take time and delay your loan approval. Additionally, if you switch lenders right before closing, you may need to start the process over from scratch. This can cause delays and even jeopardize your ability to close on time.
3. It Can Cost You Money
Switching lenders can also cost you money. Each lender has their own fees and closing costs. If you switch lenders, you’ll need to pay these fees again. This can add up and significantly increase the cost of your mortgage.
Additionally, if you’ve already paid for an appraisal or other third-party services, you may need to pay for them again with your new lender. This can add up to thousands of dollars and make your mortgage much more expensive.
Conclusion
While changing mortgage lenders may seem like a good idea, it’s important to consider the potential drawbacks. It can hurt your credit score, delay the mortgage process, and cost you money. If you’re not happy with your current lender, it’s best to talk to them and see if there’s a way to resolve your issues. Switching lenders should only be a last resort.