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Say you lock in with Lender A, and rates drop by a large amount before your closing. Is it considered unethical (or illegal) to withdraw your application with Lender A, and start a new application with Lender B in order to take advantage of the lower rates? Or would this be considered a smart financial move?
Assume there was no charge for the lock, and that Lender B would be able to close on time.
Say you lock in with Lender A, and rates drop by a large amount before your closing. Is it considered unethical (or illegal) to withdraw your application with Lender A, and start a new application with Lender B in order to take advantage of the lower rates? Or would this be considered a smart financial move?
Assume there was no charge for the lock, and that Lender B would be able to close on time.
Nothing unethical or illegal in watching your best interest. Lenders are not in the business of doing you favors.
If you have an ethical objection to doing so, you may want to at least ask your current lock lender for a free float down just to give him/her the chance.
It better be a huge difference....rates have been going up lately.
If it's FHA then you may have a problem if the current lender has already ordered the FHA case #. Then you may need it transferred to your new lender from the current one.
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Quote:
Originally Posted by Go Blue 99
Say you lock in with Lender A, and rates drop by a large amount before your closing. Is it considered unethical (or illegal) to withdraw your application with Lender A, and start a new application with Lender B in order to take advantage of the lower rates? Or would this be considered a smart financial move?
Assume there was no charge for the lock, and that Lender B would be able to close on time.
I personally would never assume that lender B could close on time. I agree with the above post about seeing if lender A can offer a float down. My reasoning behind this is that lender A already has all your information, and if they are halfway decent at what they do then they did not lock the rate without knowing full well that you qualify and they can get it done. Lender B may make all kinds of promises but for the sake of argument I will assume that they don't have the file that lender A does. If that is the case, with rates where they're at right now, it's very possible that they couldn't even get you the rate that you're currently locked into, depending on when you locked it. If you decide to go with lender B, it's a gamble that may or may not pay off. Ultimately it is your choice.
Say you lock in with Lender A, and rates drop by a large amount before your closing. Is it considered unethical (or illegal) to withdraw your application with Lender A, and start a new application with Lender B in order to take advantage of the lower rates? Or would this be considered a smart financial move?
Assume there was no charge for the lock, and that Lender B would be able to close on time.
Nothing wrong with switching from lender A to lender B.. just be sure to compare the final monthly payments, with similar down payments. Just because lender A has a lower interest rate, does not mean the payment will be lower. Make sure to compare closing costs, points etc so that your comparing apples to apples.
First ask Lender A if they can re-negotiate your interest rate if the rates have gone down. I have been able to do this a few times when rates drop a lot as they did at the end of January. The lender would rather keep the loan than fight for that rate and have you walk away.
Second, compare the fees, service and value that you are getting from Lender A. If Lender A has done a great job, helped you out, been honest and upfront, etc think it over carefully.
Do you trust Lender B to get you to the closing table?
Are you sure Lender B can get you that rate, or are they trying to snag some business by overpromising only to increase your fees and rate at the last minute?
Sometimes, .125% lower rate can end up costing you a lot of time, money and effort. Always try to get the best rate you can, but be aware of all the costs involved and the value not just the price.
I don't believe you're ethically bound to Lender A. I would, however, try to negotiate with Lender A instead of going to Lender B. As most of the other people said, there's no guarantee that Lender B is going to be able to close on time, be able to provide you the rate they quoted you (until they lock) and going back and forth might end up costing you the transaction.
Would you feel upset if your mortgage lender didn't honor the lock ageement that you had? It takes two to have an agrement IMHO.
How much does your "word" matter?
as in: "I give you my word"
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