Shopping for better rates after locking-in with one lender

Guest 0.10 Dollars($)

OK, I was recently approved for a $375k home mortgage and I locked in an interest rate (5% with 1.5 points) with a bank a few weeks ago. I am supposed to close with them next week. However, interest rate continue to fall and I now feel that my timing for the lock was not so good, as it seems I can now get the same or lower rate without paying any points.

I know this sounds 'greedy', but in today's competitive mortgage market, if my current lender does not agree to work with me on giving me a better rate because I have already locked, what happens if I simply not close with that bank and if I start over the process with another bank to get the better rate? I know I will piss off a few people, but this will save me thousands of dollars in points.

Please advise why this would not be a good idea. Just trying to understand.

chad86tsi · Joined: 20 Dec 2008 Posts: 7 5.94 Dollars($)

You'll not be getting any refunds on yoru aplication, how much have you paid so far (appraisals, fees etc?)

Talk to your lender, be straight with them, some will re-lock you vs. loosing the sale. Worst case, you'll have to tell them anyway so you may as well give them a chance to keep your business.

It's a smart decision on your part, though I do agree, I'd feel greedy too if I were in your shoes. Some banks even advertise this downward-adjustable lock feature (my local credit union does anyway).

It's your $$ spend it wisely.

smithsussane · Posted: Sun Dec 21, 2008 9:51 pm Post subject:

Hi PeteUtah!

Welcome to forums!

You may back out from the deal but may be the lender will ask you for a valid reason. Moreover, if the deal is canceled, you may have to pay a certain amount for canceling the deal.

However, if you are refinancing an existing loan with a new lender or in case of a cash-out refinance, you will get a 3 day rescission period for canceling the deal.

Feel free to ask if you have further queries.

Sussane

banker0679 · Posted: Wed Dec 24, 2008 8:47 am Post subject:

Good Morning PeteUtah and welcome to Mortgagefit!

I would speak to your current lender to see if they can lower your rate. I would also recommend to shop around. This is going to be YOUR MORTGAGE, and you will be paying it for the next 15,20,25,30 years!
You have to make sure you got a good deal since you will be paying a lo to interest!

Please keep us posted
Thanks
Robert

gmakerley · Posted: Wed Dec 24, 2008 9:02 am Post subject:

by all means, give your current lender the opportunity to review the situation before you move. in most cases, you're taking away someone's livelihood when you switch lenders. i wouldn't necessarily feel greedy, but there'd certainly be some remorse - especially if you just bolted without first providing them an opportunity to reduce their rate/fees.

i don't disagree with your reasoning, of course. just be as gentle as you can.

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