Mortgages & Home Loans Financing Your Home Purchase Should You Switch Mortgage Lenders Before Closing? If you're not happy with your lender, you don't have to stick around By Aly J. Yale Aly J. Yale Twitter Aly J. Yale is the homebuying, home loans, and mortgages expert for The Balance. With over 10 years of experience as a freelance writer and journalist, Aly has also contributed to online media outlets including Forbes, The Motley Fool, CreditCards.com, and The Simple Dollar, with areas of focus covering real estate, mortgages, and related financial topics. She holds a bachelor's of science in communication from Texas Christian University. learn about our editorial policies Updated on February 28, 2022 Reviewed by Lea D. Uradu Reviewed by Lea D. Uradu Lea Uradu, J.D. is graduate of the University of Maryland School of Law, a Maryland State Registered Tax Preparer, State Certified Notary Public, Certified VITA Tax Preparer, IRS Annual Filing Season Program Participant, Tax Writer, and Founder of L.A.W. Tax Resolution Services. Lea has worked with hundreds of federal individual and expat tax clients. learn about our financial review board Fact checked by David Rubin Fact checked by David Rubin Facebook Instagram Twitter David J. Rubin is a fact checker for The Balance with more than 30 years in editing and publishing. The majority of his experience lies within the legal and financial spaces. At legal publisher Matthew Bender & Co./LexisNexis, he was a manager of R&D, programmer analyst, and senior copy editor. learn about our editorial policies Share Tweet Pin Email In This Article View All In This Article Why You Might Switch Drawbacks of Switching Choosing Your Lender Frequently Asked Questions (FAQs) Photo: Jose Luis Pelaez Inc / Getty Images Your mortgage lender plays a big role in your home purchase. And once that loan is closed, it may also continue sending you bills and processing your paperwork—what’s known as "servicing" your loan—making it a constant presence in your life for many decades to come. For these reasons, it’s important that you’re satisfied with your mortgage lender’s services and fees. If you’re not—even if you’ve locked your interest rate, put an offer on a home, or started submitting your documents—you may want to consider switching mortgage lenders before closing on your loan. Key Takeaways You have the right to change lenders anytime in the process before you close on your loan.Before you switch, you should consider the potential costs and delays involved in starting from scratch with a different lender.If you're unhappy with your current lender's service or rates, then it may be worth it to switch and ensure a better long-term relationship. Why You Might Switch There are several reasons you may be dissatisfied with your mortgage lender. One of the most common is delays in closing. That puts both buyers and sellers in a bind. Sellers may be waiting on sale proceeds to close on their own home purchase, while buyers have often already sold their homes or seen their rental leases run out. Other reasons you may want to consider switching lenders include: Unexpected changes in fees or loan conditionsUnresponsiveness or bad customer serviceMisplaced paperwork or documentsChanges in who you’re working with (e.g. loan officers, escrow agents) You might also see a better deal out there. Mortgage rates are constantly in flux, and each lender offers its own rates, fees, and promotions. If you were preapproved for your loan some time ago—or the market has been volatile—you may receive a more enticing deal from another lender. Note Whatever the reason, you have the right to change mortgage lenders if you’re unhappy with your current one. Drawbacks of Switching Changing mortgage lenders has downsides, and one is potential delays. With a new lender, you have to start from square one on your application. That means resubmitting documents, pulling your credit, and meeting all other loan conditions the lender provides. Closing generally takes 40 to 60 days from start to finish, so this can add a month or more to your homebuying timeline. A delay may also put you in violation of your sales contract, which could mean losing the home altogether. To move forward, you would need to request an extension to your closing date. In some cases, sellers may charge you a fee, known as a per diem, for these extensions. Other drawbacks of switching include: A different rate: If you locked a low rate with your last lender, your new one doesn’t have to adhere to that lock. You’ll be quoted a new rate based on the market and your credit score (which also may have changed since you applied with your last lender). Depending on how things shake out, your rate could end up higher than on your first loan.Higher closing costs: Closing costs vary greatly by lender. Your new lender may charge additional fees, or they might charge higher rates than your previous lender. It’s important to compare all fees and costs of a lender before making a switch.An additional credit check: Your previous mortgage lender likely already pulled your credit before starting to process your loan. This is considered a hard inquiry and usually has a small negative impact on your score. Because your interest rate is based heavily on your credit score, this could influence the rate your new lender is able to offer you—especially if you were on the border between credit brackets.Paying for a new appraisal: Lenders require appraisals before issuing a loan. These ensure the lender can recover the money they lend you if you default on the loan. If you already paid your old lender to conduct an appraisal, that might not carry over to your new mortgage company, and you might have to pay for this service again—as well as other fees you may have pre-paid with your old lender. Choosing Your Lender Despite these consequences, it may still be worth it to switch mortgage lenders. But make sure to choose your new lender wisely. Shop around for the best rates and be sure to compare each on customer service, closing costs, and additional fees. Note To get a sense of what your monthly mortgage payment could end up being, use this mortgage calculator. Once you select a new lender, communicate the details of your new loan to all important parties, including your agent, the seller, the escrow agent, and more. You will likely need to add an extension addendum to your sales contract to solidify the change. Frequently Asked Questions (FAQs) When is it too late to change mortgage lenders? You can change your lender at any time up until you sign a loan contract. There may be consequences to backing out of a mortgage deal at the last second, such as having to pay for a new appraisal for the new lender, but you won't face direct consequences from the would-be lender who loses your business. How can the mortgage company change your lender without your input? The mortgage company won't change your lender unless you start falling behind on your payments. At that point, the mortgage company may worry about whether it will be able to collect the debt from you, so it could sell your debt to a collection agency. At that point, the collection agency would technically own your debt, so they are the lender you need to repay. Was this page helpful? Thanks for your feedback! Tell us why! Other Submit Sources The Balance uses only high-quality sources, including peer-reviewed studies, to support the facts within our articles. Read our editorial process to learn more about how we fact-check and keep our content accurate, reliable, and trustworthy. ICE Mortgage Technology. "ICE Mortgage Technology Origination Insight Report," Page 4. Consumer Financial Protection Bureau. "What Exactly Happens When a Mortgage Lender Checks My Credit?" Quicken Loans. "What Is an Appraisal?" Consumer Financial Protection Bureau. "How Long Do I Have to Rescind? When Does the Right of Rescission Start?"