Should You Use a Broker to Refinance?

Refinancing is not the same as buying

When you refinance, you already have a loan. That changes the math significantly. You are not just comparing rates — you are comparing your current loan costs vs. new loan costs, plus when you break even.

Why brokers excel at refis

• Speed: brokers can close a refi in 21–30 days because they work with lenders who prioritize broker files.
• No loyalty needed: you do not have a relationship with the new lender yet, so there is no reason not to shop aggressively.
• Rate/credit combos: refis are where lender credits shine (see article 15). A broker can show you the trade-offs better than your current lender will.

The refi math checklist

• Current rate vs. new rate: you typically need a 1–2% drop to make a refi worthwhile, unless you are lowering your term or switching loan types.
• Closing costs: plan on 2–5% of the loan amount in total costs (including escrow prepaids). A broker can help minimize these.
• Break-even: total costs ÷ monthly savings = months to recoup. If costs are $6,000 and you save $200/month, you break even in 30 months.
• How long you will stay: if you might move in 2 years, do not refi unless the break-even is under 18 months.

The "no cost" refi trap

You will see ads for "no-cost refinance." This usually means the lender rolls the closing costs into the loan balance or covers them with a lender credit (higher rate). It is not free — it is financed. A broker will show you the true cost vs. a "pay upfront" option so you can decide.

When to use a broker vs. your current lender

• Current lender: they may offer a streamlined refi with reduced fees ($500–$1,000) and no appraisal. If the rate is competitive, this is the cheapest option.
• Broker: better if your current lender's rate is not competitive, or if you want to shop the entire market. A broker can also help if your credit or income has changed since you bought.

Real broker refi scenario

A borrower had a 7.5% rate on a $280,000 balance. A broker found 6.25% with $4,200 in total costs vs. the current lender's offer of 6.75% with $1,500 in costs. The broker option saved $220/month but cost $2,700 more upfront. Break-even: 12 months. Since the borrower planned to stay 7+ years, the broker option won with $48,000 in long-term savings.