Financing in 32256>Question Details

Fye51, Home Buyer in Jacksonville, FL

Do banks have to uphold a good faith estimate of a certain interest rate once you choose them over another bank once the loan application has started?

Asked by Fye51, Jacksonville, FL Thu Feb 10, 2011

You have a pre-approval from bank A but bank B wants your business and ask for a good faith estimate. Bank A sends over a good faith estimate and bank B can not match or beat it so you decide to stay with bank A and start the loan application. There is missing information from application so is put on hold until next business day. Next business day you finish application but now are being quoted a higher interest rate. Bank B lost your business because at the time of the Good faith estimate Bank A was lower. Now you can not get the interest rate Bank B offered you and now your current bank A is quoting a higher rate. Does bank A have to honor their interest rate at time of good faith estimate since loan process was already started? Does bank A have to honor the interest rate even if they mistakenly sent bank B the wrong interest rate on good faith estimate? I know it is a 2 day period to either finish or have a loan sent to underwriting to be declined.

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Fye,
The term, "Good Faith Estimate" contains the word "Estimate." Until you submit a complete file and lock your rate for a specific time, things can and do change. If you got the estimate from bank "A" on one day and bank "B" on another, you really can't make a fair comparison based on rate. Rates can change multiple times a day which really makes it tough.
I would focus on the expenses on your form, how much is each charging for Origination or the Brokers Fee? Issues like Title and Escrow are typically third party fees and shouldn't be too far off. Ultimately you have to choose the lender who you believe will be most competitive based on what you see when you get it.
You can ask both lenders to update their quote for the same day and decide, but again, until you lock nothing is set.
I'm sorry this is so complicated. I hope all turns out well for you.
3 votes Thank Flag Link Thu Feb 10, 2011
It's not unusual for these estimates to change once all the info. is in.
2 votes Thank Flag Link Fri Feb 11, 2011
Fye,
The interest rate quoted on the estimate is good until there are any changes in the market - usually not until the next day, but I have seen rates move - both up and down - several times in a day.
Also - conventional loans, and government loans at some lenders, have risked based pricing. That means higher interest rates for lower credit scores. Since I am usally providing an estimate before I have pulled credit - there may be a need to factor in the risk pricing for a client with credit scores less than 740.

When getting estimates from several lenders to shop for the best rates and terms. Negotiate the bank fees first, Settle on the 2-3 lenders with the best fees, and most knowlegeble and professional service,then call to compare rates on the day you are ready to lock in. You should not need to wait for an underwritting review before locking a rate
2 votes Thank Flag Link Fri Feb 11, 2011
short answer: NO

GFE doens't have the rate LOCK feature. You have to LOCK it in writting for rate to stay effective (30/45/60 days). My experience is bank/lender will not allow you to LOCK until they have reviewed your loan application and received a few key information. Then they will allow you to lock the rate. GFE is mostly about fees/cost ...
2 votes Thank Flag Link Thu Feb 10, 2011
Dan's answer below is spot on. The good faith estimate is by its very nature an estimate. Markets are subject to change, whih in our current situation can be hourly. It is not unril you receive an executed Application and Interest rate Disclosure with a specific rate that you know that you are indeed locked. I would also ask if you considered that bank Bank B might also be different if they had the application with the missing piece of information that you reference in your question.
Web Reference: http://www.loanorama.com
1 vote Thank Flag Link Fri Feb 11, 2011
If you're interested I can also let you know what our rates are for whatever day you are being quoted a rate. Please let me know if I can be of any assistance.
0 votes Thank Flag Link Thu Apr 28, 2011
Hello,

No rate is guaranteed until you choose to lock it in for a fixed period of time. Typically on a pre-approval letter it should disclose if the interest is floating, additionally, there is probably a disclosure that should read "rates are subject to change daily"
0 votes Thank Flag Link Thu Apr 28, 2011
If you're getting a conventional mortgage, try: http://www.AimLoan.com they have the best rates and lowest "lender related" fees (the only fees the lender actually controls).

Here'a a very informative website: http://www.MtgProfessor.com
0 votes Thank Flag Link Fri Feb 11, 2011
I actually have a similar question, the interest rate was fine, but as soon as they "approved" us, they put in a 1% fee (due to our credit), told they changed this "program" and now charging as of a few weeks ago. I'm assuming they can do this? We spent two months going back and forth in underwriting and now need to pay an additional $2500 which we of course were not happy about. Is this legal for banks to do?
Flag Fri Feb 8, 2013
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