Buying a home is already complicated, so you might think, “Once I’ve chosen a lender, the hard part is over, since all lenders offer roughly the same products.” Not exactly. Switching lenders is not only possible, but it can also be a smart financial move. While the idea of starting over or navigating multiple loan processes might feel overwhelming or even off-limits, it’s often worth considering. Here’s a straightforward guide to when and how to switch lenders—and why doing so could save you thousands of dollars just at closing.
Why would you switch lenders?
The short and sweet: better rates and better deals. Mortgage rates vary widely from lender to lender, and even a small difference can mean major savings over time.
Here at Tomo Mortgage, our rates are typically 0.48 points lower than most lenders. On a $450,000 loan, that’s about $146 less per month—or close to $17,559 over 10 years.
Lenders compete for your business, so you’re not stuck once you start the process. Switching after pre approval—or even after applying—can be a smart move if you find a better rate or lower fees elsewhere.
Want to see how fees stack up? Check out our loan estimate breakdown where we walk you through spotting lender fees and avoiding common pitfalls.
Pro tip: Don’t settle for the lender that comes “recommended” by a real estate agent. Agents typically have no idea whether one lender’s prices are better than another since there are millions of different pricing variables that go into someone’s rate. At Tomo Mortgage, where we have some of the best pricing anywhere, we’re only the “best” for about 87% of single family home buyers. So, most people can save money with us—but not everyone, and we’re happy to be upfront about that. So, find the lender that works for you and your needs, and not necessarily what your agent needs. Your wallet will thank you.
Different stages, different strategies: how to switch lenders without the hassle
1. After pre approval
Think of pre approval as a “soft yes” from a lender. It shows you’re a serious buyer, but it doesn’t lock you in. If you’re not thrilled with your rate or terms, now’s the time to shop around.
Be mindful of credit checks: Tomo doesn’t do a hard credit inquiry to qualify for a pre approval—a “soft credit” check is the right way to go at this stage. If you do talk to lenders that have to do a hard inquiry to give you a rate (and again, this isn’t necessary), do your rate shopping within a 30-day window so credit bureaus treat it as a single inquiry.
2. After you win your offer on a new home (that is, you’re “in contract”)
This is one of the best times to search for the best price on a lender—you’re getting the latest pricing that you might actually want to lock-in, as you move closer to close. At this stage, switching lenders is very straightforward.
In about 1% of deals there might be an odd fee for canceling a lender or a strange condition on a specific lender in the purchase contract, but these exceptions are far from the norm. You can talk with your Loan Advisor about these details to ensure there’s no risk of switching. And, even if there are fees, a lower rate elsewhere could outweigh the upfront costs. For example, saving just 0.25% on a $500,000 loan could mean $70 less per month—or nearly $8,400 over 10 years.
3. After rate lock or after your application has been submitted to underwriting
Switching lenders after locking a rate is trickier, but not impossible. You might have to forfeit the costs associated with an appraisal (not too significant a cost, compared to what you could save with a better priced lender).
The biggest challenge in switching at this stage is time-to-close (and, if the closing date moves, there may be a risk of losing your Earnest Money Deposit). Depending on your property and finances, closing can still be pretty quick and straight forward—about 30 days at a typical lender, where it can be as little as 15 days at Tomo Mortgage.
It’s during this stage that many agents will tell people to avoid switching—they don’t want to risk missing out on a commission, after all. But, if the switch makes sense and the savings is significant, you might want to ignore their advice.
Savings at a glance: monthly and long-term benefits of lower rates
| Home value | Monthly payment at 6.5% | Monthly payment at 6.0% | Monthly savings | Savings in first 5 years | Savings in first 10 years |
| $300,000 | $1,896.20 | $1,798.65 | $97.55 | $5,853.15 | $11,706.30 |
| $500,000 | $3,160.34 | $2,997.75 | $162.59 | $9,755.25 | $19,510.50 |
| $700,000 | $4,424.48 | $4,196.85 | $227.62 | $13,657.35 | $27,314.70 |
Will switching lenders delay your closing date?
Many people worry about switching lenders because they fear it’ll delay the closing. A new lender needs time to process your application and complete underwriting, but this process doesn’t really start until after you have a signed purchase agreement. So, if you used one lender to get the pre approval before making an offer, there’s no risk at all in switching lenders once you win the offer.
From this point, it really depends on the complexity of your purchase and the time it takes to complete underwriting. A typical lender will need at least 30-60 days to complete this process. Here at Tomo we automate a lot of the back-end processes, so we can complete the closing in as little as 15 days (or less). If it’s a condo with a lot of stipulations, you’re self-employed, or you’re looking for a government-backed VA or FHA loan, this process might take a little longer.
But remember, whatever lender you choose, there’s always a risk you’ll miss your closing date. At Tomo Mortgage, we pride ourselves on quick turnarounds, closing on time 98% of the time (the industry average is just 40%).
Does switching lenders mean paying for another appraisal?
Not necessarily, but it’s a possibility. Many lenders require a new appraisal if you switch, which can cost $400–$1,000. Check if your new lender accepts a transfer of the original appraisal report (this is often the case in a FHA or VA loan). If not, ensure the savings from the switch outweigh the added cost of a second appraisal.
Why rate shopping (and switching lenders) is worth it
At the end of the day, buying a home is about getting the best deal possible. While it might feel easier to stick with the first lender you talk to, exploring your options can lead to better rates, fewer fees, and long-term savings.
Switching lenders is one of the easiest ways to save big over the life of your loan. Don’t let the hassle hold you back—you’re in control, and every dollar saved is money in your pocket.
Give us at Tomo Mortgage a call to get started today: 737-510-2523
If you’re ready to start your journey to homeownership, get pre approved with Tomo Mortgage today.
