Complicated issue - jumping lenders? What is my recourse? (loan, fees, rate lock)

[limniade]

Okay, here's the situation. I have a rate lock agreement with a lender. That agreement is for a 5% FHA 30-year fixed and I pay closing costs.

A few days ago, the builder's lender, whom I'd also spoken to but did not sign anything because their deal wasn't as good, came back to me with a better deal: 4.875% FHA 30-year fixed, THEY pay closing costs and 6 months of my HOA dues. That's a big difference--about $100/mo over the life of the loan, plus my loan amount is $5K less, plus the $150/mo I'd save for 6 months.

My first lender says I can't take the deal because I locked with them, the second lender says "Hmm, I don't think that's the case," and from what I understand from reading the Internet, I CAN break a locking agreement and will forfeit what fees I have paid (in this instance, the $450 to Lender 1 for the appraisal).

I honestly don't know what my options are at this point. Who do I ask? Can I take the second deal?

[stuffavail]

Here is what I would do:
1) Get the second deal in writing. Did they add points? Is the new rate a sure thing? Rates change 4 x a day.
2) Send a copy of the good deal to the first lender.
3) If they cannot match it, find out how much the fee is to remove yourself from the first agreement.
4) If you went far along enough the make application and lock in a rate there is probably a fee to bail.

Good luck!

[limniade]

Originally Posted by stuffavail

Here is what I would do:
1) Get the second deal in writing. Did they add points? Is the new rate a sure thing? Rates change 4 x a day.

I do have a GFE from the second lender detailing the deal. I understand rates change, but my guess here is that they're promising that rate in particular in order to obtain my business (I'd already told them "no" at one point because they couldn't match the other lender).