Ethical dilemma!!! (loan, escrow, real estate, premium)

[3nicedogs]

I am purchasing a condo using FHA 3.5% down. I compared 3 lenders and after some haggling, locked with the lender with the best GFE (Lender #1). The second best GFE was from the home developers "preferred" lender and they went so far as to apply for my FHA case # even before I locked with them (Lender #2). Yesterday, my lender requested that the case # be transferred to him. I then receive an unexpected call from Lender #2 reducing their fee and beating the GFE from Lender #1. I considered it, but told Lender #2, sorry, that I was still going to going with Lender #1 (didn't want to break the lock). Then Lender #2 countered yet again but dropping another $1,105 in fees (the lender fee).

So now I don't know what to do. I would feel guilty about breaking a lock with Lender #1 but the terms of Lender #2 are more favorable. I'll list the estimates below. Lender #2 lists higher title and government fees but now sure if that shoiuld concern me since they're out of the lender's control anyway, and they may be more in line with what I'll actually be paying since they are closing condos on this development and they should know what the closing costs actually are.

Should I stay with Lender #1 or break the lock and go with Lender #2???

Loan Amount $222,622

Lender 1
5%
Loan origination $1,094
Appraisal $400
Credit report $20
Processing Fee $495
Commitment Fee $649
(YSP .715% $1,551.74)
Title fees $1,400
Recording fee $125
Interest/MIP $4,322
Taxes/Reserves $1,060

Lender 2
5%
Appraisal $450
Credit report $35
Flood check fee $26
FHA/VA inspector $250
Broker fee (paid outside of closing by the lender) $2,187.94
Interest/MIP $4,286
Taxes/Reserves $1,235
Title fees $1,850
Recording fee $125
City/County Tax Stamps $208
Condo/HUD HOA transfer $65

[SmartMoney]

So what you are saying if all is the same, you can't buy my business. But if you beat the lock, you can have it?

There will always be someone that can give you a better deal. The case number means absolutely nothing, they don't own it.

Many of the lenders here disagree on various issues, but the one thing I think we agree upon: go with who you trust. What good are lower fees if they can't deliver the loan at closing and cost you more in the long run? Never select a lender just for price.

[zulu400]

Originally Posted by SmartMoney

So what you are saying if all is the same, you can't buy my business. But if you beat the lock, you can have it?

There will always be someone that can give you a better deal. The case number means absolutely nothing, they don't own it.

Many of the lenders here disagree on various issues, but the one thing I think we agree upon: go with who you trust. What good are lower fees if they can't deliver the loan at closing and cost you more in the long run? Never select a lender just for price.

This is true....
Who do you think can get you the loan approved and close ? My real estate attorney told me he will charge more if I choose some online lender as they suck bigtime !!

[rubytue]

Originally Posted by 3nicedogs

I
Processing Fee $495
Commitment Fee $649
(YSP .715% $1,551.74)

As a consumer, these three fees would probably turn me off of lender 1 to start. Two are junk, and the third (yield spread premium) is the broker's bonus for selling you a higher rate than the lender would give you.

[SmartMoney]

Something else I just noticed, many of the fees you list there are fixed fees and will be the same, REGARDLESS OF THE LENDER YOU SELECT. In other words, the Tax Stamps will be the same for both lenders, they are just estimating how much they will actually be. Same with the Reserves/Escrows/Taxes (all the same thing), they will be the same from lender to lender. They are giving you "estimates."

Do you see how easy it is to manipulate the numbers? This is the oldest game in the book.

Oh, and by the way, the market continued to improve on Friday. If the improvement holds thru Monday morning, you most likely could find an even better deal. So, when do you stop?