Financing in San Ramon>Question Details

Jb, Home Buyer in San Ramon, CA

Is it smart to work with 2 different lenders side by side when getting a new home loan?

Asked by Jb, San Ramon, CA Fri Aug 13, 2010

I know each lender has to run the credit report and order an appraisal but are there any other issues/costs that I need to be concerned about? The worst case scenario according to my research is that I loose $500 in appraisal and credit report fees from one of the two lenders I am working with.
Also if I lock my rate with one of the lenders do I have any obligation to get my loan funded from them or can I lock with the second lender also and go with them instead? Any help or advise in this matter would be appreciated. Thanks.

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Apparently this borrower believes a lock is a one way street. If you LOCKED a rate with someone, how would you like it if at closing they decided that rates were better and opted to charge you more, or better yet, decline your loan in favor of a borrower that applied later at the higher rate? You would not stand for that right? Why? Because it's unethical. There is a tangible cost to locking rates. The lender experiences them and the loan officer experiences it with decreased pull through percentage, which means decreased tier ranking for them with that lender and that means increased rates and they become less competitive. Did you ever wonder why some brokers seem to have these magnificent rates and others don't? It's called "pull through" and the more locks they fund, the better their rate sheets look with that lender. When you break a lock, you are taking food out of the mouth of someone's children and they already did the work. You would not tolerate your boss having 2 people do the same job and only paying the one he thinks did it for the least amount of money, why would you expect others to work for free?

If you want to do this, you should tell them you are doing it so they can make the decision whether to continue working on your loan. If you don't tell them, you are no better than the dine and dashers that eat the meal and bolt without paying. Don't force someone to work for free, it's unfair and not anything you would want done to you.

Loan officers are the ONLY ones subjected to this business practice and it must stop one of these days. If you lock a rate, it is to protect both parties. It protects you from rates going higher and it allows the lender to allocate those funds. If you do what you are suggesting, you only care about your side of the deal. I cannot tell you how many times people try exactly what you suggest and end up getting burned. What happens when lender #2 with the 3.75% rate tells you they are ready to close, you break the lock you had with lender 1 and then lender #2 hands you a HUD with $5,000 extra in fees on it and they say your rate will be 4.25%. What are you going to say? Let me guess, you will complain that you had a "rate lock" and post here asking if you can sue the lender for breaking the lock. It seems rate locks are only sacred when the borrowers are the ones getting burned.

Pick an ethical lender, do the best you can to get the best rate and terms, lock your rate when it works for you and stop trying to always get better. At some point, good enough has to do.

KARMA is king!
6 votes Thank Flag Link Fri Aug 13, 2010
Get off your hi horse and stuff it. If the Mortgage originator knew what the heck he/she was doing, then there wouldn't be a need for a backup mortgage source. If you sell real estate, can you say that you have never lost a signed deal because the lender wouldn't fund the "pre-approved" buyer? I found this old post because I have been jerked around by un-trained, un-educated loan originators that plug the numbers into their software and promise you everything, only to be shot down by underwriting!!!!!! As a self employed small business owner with a very small income footprint, it takes a PROFESSIONAL that knows what he is doing to understand the requirements of depreciation and recapture to obtain a true income statement. The fact that you can go somewhere else does NOT make it ok when you have wasted a month or two and the seller said enough is enough. So I think this is a VERY valid question, and do not agree that there is anything unethical about it at all. It can kae all the diff!
Flag Mon Apr 18, 2016
Business is business. It is a very good thing that we are working with two lenders. Today, we were notified that the mortgage broker needed the sales contract from our current home in order to close on our new home. He prequalified/preapproved us for our loan with the understanding that we were going to land contract our current home. He told us this would not be a problem. We are one week away from a scheduled closing with another lender who kept his word. A direct lender (not a broker....big difference, we found out). The broker said that our application looked clean...never said a word about requiring a sale. Today, he sent an email requiring the contract of sale on our current home. The other lender has the loan approved and has a closing date set. It is not contingent upon the sales of our current home. The mortgage broker will not hesitate to say anything to get you to lock you in & string you along. In the end, we would have lost our new home had we just relied on one.
Flag Tue Aug 20, 2013
I love how every single response here is from a loan officer/mortgage broker.

If you want an UNBIASED answer to your question than ask consumers, no insiders looking to sway you.

Listen to this: There is nothing morally wrong about locking your rate with several lenders. Most reputable lenders will not charge you for appraisal and credit until closing so these are free services that they are offering to you in HOPES that you close a loan with them.

There is nothing at all wrong or immoral for having 2, 3 or more lenders show up on closing day with their final offer and then sending the 2 that can't compete home. This is the biggest purchase of your life, do not make a deal unless you have the leverage of multiple lenders fighting for your signature!

Every lender that stumbles across this comment will bash every word I said...of course they will. But you are smarter than that.
3 votes Thank Flag Link Wed Jul 29, 2015
A deal isn't done until it closes. Lenders realize there is risk, just like every business transaction in the real world. You shouldn't feel bad for doing what is best for you. Paying extra money upfront and every month going forward as part of your mortgage to avoid hurting someones feelings or not proceeding with a "locked in rate" is ridiculous. Do what is best for you, the mortgage lenders do the same and it works out.
Flag Sat Feb 13, 2016
"Most reputable lenders will not charge you for appraisal and credit. Actually "MOST" will charge you for the appraisal. You pay the appraiser directly via credit card to get the appraisal done. source: Mortgage Banker and Brokers.
Flag Sun Oct 18, 2015
I would really advise against going that far down the path with two lenders. My advice would be #1, get a copy of your credit report, then #2 get two or even three recommendations from the Realtor that you are working with for lenders that they know and trust.

Talk to the lenders. Be up front with them. Ask them what they could offer right now if you were ready to buy. Then go with the one that feels right to you.

A word of caution - there are many lenders who promise the earth but fail to deliver. Internet based lenders seem to be the worst in that respect. Remember that it is not just about getting the best interest rate. There is little point in working with a lender who is unable to close the transaction on time, if at all. You may also find that origination fees will vary significantly from one lender to another.

Your Realtor does not get any "kick back" from a lender. That is illegal. He or she will recommend lenders to you that they have worked with in the past and that are honest and reliable.

Bernard Gibbons

Bernard Gibbons, J. Rockcliff Realtors
DRE License # 01331583
Phone (925) 997-1585 -
3 votes Thank Flag Link Fri Aug 13, 2010
What do you hope to gain? Why do you want others to go to the time and expense of doing this for you? Do your homework before you go forward with your lender/broker of choice. Is that really too much to ask? .... Happy funding, Rudi
Web Reference:
2 votes Thank Flag Link Fri Aug 13, 2010
this guys an idiot... i wouldnt trust you
Flag Fri Jun 10, 2016
Interrogate your Lender! There's no need to play good cop, bad cop. This simply means you need to ask every question that comes to mind. In the wake of the predatory lending storm, its important to be sure you understand exactly what your mortgage will entail. Be sure to compare rates with other lenders to be sure you are getting the best rate.
1 vote Thank Flag Link Tue Aug 24, 2010
You can also be flagged for attempting mortgage fraud by having two owner occupied loans going at the same time. It is not a safe way to go.
1 vote Thank Flag Link Sat Aug 14, 2010

I understand your concern over getting the best rate possible, but you have many comments below that have explained how and why it hurts not only you but the lender if you drag it out beyond the rate lock. Shopping around for the best rate, fees, courtesy, knowledge etc. is fine, but once you have gotten to the point in time to lock your rate, I'm afraid I agree with the others.

I have been on the buying side with unscrupulous lenders and I know exactly what you mean when referring to the housing crisis. I am a real estate agent and a victim of it! However, I think the previous posts are trying to help you understand what not to do in order to avoid that type of lender.

Once you have chosen the lender, that lender is in touch with your agent, your title company etc. We develop a working relationship and 'get the ball rolling" so to speak. It can create all kinds of issues if you switch lenders part way through the process. There are many steps to climb and bridges to cross to get from point A to point B. You want to make sure that the professionals you chose to assist you in the process are on board with you and the others involved are working in your best interest. That would be extremely difficult to do if you were still trying to choose between two lenders.

So bottom line, do your research and shop around, but once you get to the point of a rate lock, you should have made your decision on who you are going to work with - if not before.

Web Reference:
1 vote Thank Flag Link Sat Aug 14, 2010
I don't quite understand your post but if the vent makes you feel better then I respect it. Stooping to the level of the banks is not necessarily a great argument, but you surely are entitled to make it.

My point is very simple, don't lock a rate unless you are ready to live with it. Last time I checked, that's what the word "LOCK" meant. If you don't want to lock, you bare the risk and float but don't try to have your cake and eat it too. When a lender burns you at closing on your lock, you know, the one that baited you in with the lowest rate, I hope you remember this post, because it's obvious you place no value on quality.

Anyone can quote a rate, the best loan officers close them ... on time.

1 vote Thank Flag Link Fri Aug 13, 2010
JB, your thinking and rationale is completely misplaced. When you shop for a car, you don't put a deposit or ask them to take each one off the lot while you negotiate on another, if you did that, you would lose your deposit. When you LOCK a rate, you are making a commitment. No one says you should not shop, but when you are done shopping, you should pick ONE PERSON to work with.

Your comment:
"I do realize that one of these guys will end up wasting a bit of their time but if they can not offer the best product (rate and fees) out there than it was probably my mistake to pick them in the first place."

... is outrageous. How exactly can someone control the mortgage market? They offered you the best they had at the time and obviously good enough for you to lock with them, if rates fall, how on earth can you make a statement like that? No one forces you to lock a rate, you have the option to float until 3 days before closing if you wanted. If you chose this option, you would RISK losing the rate you were offered but could improve with the market, the obvious reason you didn't choose this option was the RISK. You wanted the protection of the lock while bearing none of the risk; it's easy to play the market on someone else's dime. A term in contract law and also in an ethical society is "consideration", and you have none regarding either. When I get clients like you I immediately cancel their lock and drop their loan if they are actively in a transaction elsewhere. I don't have time to commit my resources and expertise to someone who treats our industry as a used car lot. Scratch that, with less dignity or respect than a used car lot.

Some will say my post is harsh, but I make no apologies for my opinions and seek to educate borrowers because it's behavior like this that actually causes rates to increase for everyone. When lenders have to build into their rate sheets the cost of broken locks, then you will see these historically low rates disappear for everyone. I know we live in a Me, Me Me, society, but when is enough ... enough?

Good luck to you.
1 vote Thank Flag Link Fri Aug 13, 2010

In all fairness to your original lender, you should contact them & let them know what you are doing - they gave you a great rate two weeks ago & they have put in the work for you - they might be able to work with you on this like Robin did with her clients.

There is considerable investment involved with locking a rate & I can see where if what you are thinking of doing is done by more & more borrowers, you can bet that in the future, you will see all banks requiring some type of non-refundable rate-lock fee that will make it painful for you to jump ship at the very end of the process. I am presuming this is not an FHA loan, because of how they are structured, & you would not be able accomplish this if it were.

Gregorio gave a very good passionate & detailed explanation. Another example in real estate would be for you to use two real estate agents to help you find a home & then once you decide to make an offer, you start asking them which one will give you the most rebate from their commissions to lower the price of the home or to help pay your closing costs.

What do you do for a living? How would this affect your income if someone did something like this to you?
1 vote Thank Flag Link Fri Aug 13, 2010
I know that Gregorio will be surprised to hear me say this, but he has explained things perfectly. It is more important to us than ever before to have high pull through, high closing ratios and even to spread out our loans to a variety of sources. This is something that it is difficult for our clients to realize, but any of us who are honest and reliable will jump through hoops to get you what you want, and renegotiate your rate when rates drop. I just did rate reno's for 2 people on Wednesday, the day that rates dropped to their lowest. One of the people kept e-mailing me articles on the rates falling. He was telling me they were dropping .001%. To lower his rate, I needed more than at .125 drop. Surprisingly, I was able to do that for him on Wednesday. I had someone else who was also locked, and I was able to get them .25% lower than where they were locked, and they weren't even asking me about it. I knew where they were, and I knew to watch this for them.

On the other hand, if you came to me and told me you were double-apping me, I would tell you just to use the other person, no matter what. You may not understand why, but it is because of what Gregorio said. You are one client, and even though you can refer me others, my overall business is more important to me than 1 person.
1 vote Thank Flag Link Fri Aug 13, 2010
I think Bernard makes an excellent and often overlooked point.

It does not matter what they promise you if it doesn't close on time or in some cases doesn't close.

At the risk of being a bit repetitive, but something worth repeating. It is illegal for a real estate agent to accept anything of monetary value from a lender. The reason we as agents like to offer the names of lenders that we prefer to work with is because it is our business to know that the lenders we recommend with not only look out for the best interest of our mutual client but also that they can get the job done in an honest and timely manner.

Web Reference:
1 vote Thank Flag Link Fri Aug 13, 2010
A deal isn't done until it closes. Lenders realize there is risk, just like every business transaction in the real world. You shouldn't feel bad for doing what is best for you. Paying extra money upfront and every month going forward as part of your mortgage to avoid hurting someones feelings or not proceeding with a "locked in rate" is ridiculous. Do what is best for you, the mortgage lenders do the same and it works out. Check your commitment letter to see if there are any clauses that penalize you for not proceeding but don't feel bad for not taking a bad deal if you can find a better one.
0 votes Thank Flag Link Sat Feb 13, 2016
I had the same situation. When you ask for pre approval letter lenders are so generous. There is no restriction for lenders for pre approval. I trusted a bank and waited for mortgage. Last minute denied. Then I approached a broker. It was too late and i lost the house. The broker approved my mortgage after 2 weeks of contract expired with 2%higher rate ( may be knowing my situation.But I have a good credit). I wasted all my time real estate agent time stress etc.

Now I have contract with another house. Lenders have no guaranty of their promise all up to the under writer. My lost time cost me a lot. market price gone up.

Now should I go with the broker with 2% high rate or try another lender with market rate. For the final approval you have to have a contract ( which is a stupid rool).

My situation I wanted to try with 2 or 3 lenders at the same time even if i have to pay for appraisal. at least there is a possibility of getting a house. You cannot trust on lenders, all up to the under writer.

The system should be Financial institution should have done a final approval up to a maximum amount before a contract and lock it for 90 days or 60 days. The buyers have 90 days to look for a house with in that price range. After the contract 5 business days for financial institution to check the borrower's financial situation and final approval or denial mortgage.

The seller do not have to keep the house off the market for 2 months for financial approval.
0 votes Thank Flag Link Wed Nov 11, 2015
My daughter was denied a loan by an underwriter at the bank, and the loan officer himself recommended other lenders, and in fact called them himself and sent her docs over to them. He apparently went to bat for my daughters loan and was very upset that it was denied, as he has had similar loans accepted, and he viewed it as being denied for specific hardline rules within the confines of that bank. With that in mind, my daughter is DEFINITELY applying to 2 lenders as she wants the house! Both of the new lenders know this is occurring and are being very gracious about it under the circumstances.

My husband and I also had a similar situation 5 years ago when we purchased our house. One lender was dragging his feet, couldn't seem to perform. A month away from close we contacted another lender who said she could and DID close in 30 days. The other lender was still a long way away from close. The sellers were terribly upset and did not, could not extend we were told. We would have lost this house if we had not acted.

I say its a case by case scenario. The point is to get the loan closed and the deal made.
0 votes Thank Flag Link Wed Jun 17, 2015
Do your research before you submit your application and start spending money. If you are trying to play "rate", do that work up front, and really focus on an apples to apples comparison. I'm hearing a lot of noise about some lenders enticing borrowers with their 'best" rate only to change it to reflect the true rate down the road. Rates vary now depending on your credit score.

So my recommendation is to do your homework upfront. All lenders are funded in essentially the same way so the terms/rates should not vary that much. If you see a big variance, you are likely on to a surprise down the road. Do your research, find yourself a lender you trust and talk with him/her about what you are learning. If you have "real" and "deliverable" competing product, they may well be able to meet it or get very close.

There are enough moving parts - and expenses for you - in ushering your transaction to close. Pick the best resources and product for you and then let them do their job to help you.

Jeanne Feenick
Unwavering Commitment to Service
Web Reference:
0 votes Thank Flag Link Fri Mar 4, 2011
It is smart - and it keeps everyone honest.

As long as you know you that you risk losing the upfront fee paid to the lender that does not make the cut - you should come out ahead.

My favorite maxim is "You should be close enough to your mortgage banker to strangle them if necessary". Work with local bankers with recommendation from your Realtor. You will have that relationship to leverage in getting the best deal.

Let both bankers know up front you have made 2 applications. Full disclosure keeps everyone honest.

Gerry Dunn
Associate Broker
Serving Maryland, D.C and Northern Virginia
0 votes Thank Flag Link Fri Mar 4, 2011
In response to Berry below...
I wouldn't call your situation unethical at all; but what you described is not a "work with two lenders at the same time" scenario as was JB's from San Ramon. Berry, your case is one where you as the consumer got stuck in the middle of poor communication and decision-making abilities from your home building team...but, then again, I'm also not one to advocate using a builder's "in-house" lender (usually this is when the builder and the mortgage company have the same name, or the builder has some kind of ownership interest in the mortgage company), because any appearance of a better deal is typically a much worse deal overall. In your case, it was the "affiliation" that ironically caused the poor communication. But, this lender screwed up and it could have cost you by sticking with them. As biased as I might be against this builder's lender, I might still suggest you give your loan officer a brief window of opportunity to present you with a solution; but, overall, I think you are making a good, ethical decision with your change of loan officer.
0 votes Thank Flag Link Thu Mar 3, 2011
Well how about this. I'm in the process of building a home right now in Fort Worth. Yesterday, I get a call from the Mortgage company, which is the same company building my home and he tells me we are less than 30 days to close. They were suppose to give me a wriiten notice by my contract when I was 45 days out, but I never got such a letter, so based on this go ahead and lock the rate and tell my wife who is now very excited knowing we were going to be closing on our new home by end of March. Well when I go by the model home to see the sales representative and tell him how excited we were, he looks stunned and tells me my house is tell over 45 days out! He gets on the phone with their lender and realize their reports are wrong!!! So I'm going to go with another lender, because my lock is no good, because it was a 30 day lock. You guys can call it unethical all you want but you can bet your luck stars I'm now going to secure another lock from a different mortgage company.
0 votes Thank Flag Link Thu Mar 3, 2011
I would shop the rates and interview the lenders. Get your good faith estimates and compare each so that you are truly comparing apples to apples. Then select the best rate with a lender you can trust. You wouldn't want to pay fees for services multiple times. Ask your realtor or friends you have just recently purchased, I'm sure they will have preferred lenders. I know myself, the lenders I recommend want to continue receiving my referrals so the go above and beyond to make my customers happy.
0 votes Thank Flag Link Mon Aug 30, 2010
@Robin & Jeri,

Then I'm one of the few. I post my rates daily on my website at Correspondent Rates with YSP closest to Par with APR, 45 day lock & escrow waiver. When we lock the borrower sees the Lender's Confirmation with the Locked Rate & YSP earned. YSP is deducted from their closing costs. ... I also post my Settlement Costs under "See How We Do It." .... Being a Correspondent Lender we are not required to disclose YSP. I do!Upfront Mortgage Banker (UMB) Orange County (OC)

Happy funding, Rudi
Web Reference:
0 votes Thank Flag Link Fri Aug 27, 2010
Jeri's point is well taken, however there are still many loan officers who quote teaser rates and promise you will get it, then for some reason don't come through. It reminds me of when I was in the retail business and sold toys. We couldn't compete with the advertised price of the popular toys at Christmas time. People we come in, we would have the toy, and tell them it was $20. They would tell us that the big Toy retailer had it for $10. When we asked why they didn't buy it there, try told us they didn't have it in stock. We said that when we don't have it, it's $5. You are not ready to lock in, whether it's because it's a short sale, or if they can't get you underwritten and closed in that period of time, you will be sorry that you fell for the low rate that you never got.
0 votes Thank Flag Link Fri Aug 27, 2010
Be upfront with the lender. I think you should have someone you can trust to help you. A lender can make a big difference to you. There may be other times you will need or want the lenders help.
0 votes Thank Flag Link Tue Aug 24, 2010
This is a slippery slope, I'd compare the lenders before sinking money into both of them, usually both lender can give you an estimate before signing on the dotted line. If anything it would be best to let both lenders know you are talking to other lenders so they shoot low the first go around. A good lender will give you a good deal with no points and no fluff.
0 votes Thank Flag Link Mon Aug 23, 2010
By all means, shop around all you want (3+ lenders), but when you are ready to lock in, order the appraisal, and move forward, pick the lender that is giving you the best deal and/or that you feel most comfortable working with. If you are concerned about locking-in and having the rates go down, and then moving your file somewhere else, you may or may not be charged with an appraisal depending on how the loan officer works.
0 votes Thank Flag Link Mon Aug 23, 2010
Might I suggest from an agent standpoint, versus a mortgage broker's standpoint, that the appropriate time for shopping rates and services is prior to making a commitment and application with one lender. Understanding that the drawback to the consumer is that, until a loan application is submitted, the rates quoted could just be teaser rates, and then the whole "oh, well that was the pricing last week" story comes out... hmmm... Doing some homework in advance of selecting your lender might include not only a one shot comparison of daily rate quotes, but perhaps, get a few recommendations of lenders from successful agents who close a lot of business, have those lenders do a pre-qualification for you, (don't go for a full pre-approval at this point) and query them about their rates and fees a few times, if you were to "lock" today. Be sure to compare the scenarios on the same day from any brokers you are considering, as rates fluctuate daily. Very quickly you should be able to get a feel for not only who consistently has access to the best rates - but also, who you personally like working with best. That can be as important in the long run as the rate. Then choose one, and remain committed to that lender, barring some unforeseen event that causes you to re-think that decision for good cause. There is power in commitment - it gives the other person the comfort level and permission to do their level best for you.

Good luck!
0 votes Thank Flag Link Mon Aug 23, 2010
Naw its not too cool to have two lenders work on your loan. Theres a lot of work when mortgage loans are done, and when you you have to choose then which lender you are going to use, it sucks to give a stupid excuse to the one you aren't going to use. What are you going to say? U lost your job? Or your fees are too high, after they already went over the fees and rates?

Just go with one lender you know and can trust. People don't work for free.


Sameer Punjani
0 votes Thank Flag Link Mon Aug 23, 2010
I have seen this scenario a few times it sets off red flags in underwriting, I could be considered fraud attempting to aquire two morgage loans at one time. Even though it is not, especially in this regulatory market.

I would not advise it....because you will end up wating your time with no loan and have to wait to submit to other lenders. This is mortgage regulation at its finest, sorry.

Ask your realestate agent for a local referal hwo always does them right....

Hope this helps.
0 votes Thank Flag Link Sun Aug 22, 2010
Interview the mortgage bankers in question. Who do you feel more comfortable with? Which one is telling you what you want to hear and which one is telling you the facts, good, bad or indifferent.

Look, mortgage bankers hate getting double app'd. And it really isn't in your favor anyway. Getting a loan shepherded through all the bull crap today is tough enough. You want to incentivize a mortgage banker to work your file.

And don't go comparing apples and oranges ... rates/points change every day. So don't go comparing what mortgage banker A quoted you on day 1 to what mortgage banker B quoted you on day 2 and make a decision on just what they quote.

Personally, if it's the house I really want and I felt based on my intereview, that Morgage Banker A was a better shepherd and could herd my loan through the what is often an exasperating underwriting process, I don't give a crap if I end up paying an 1/8th or even a 1/4 percent more.

Do you want the house or not? Now go get it!
0 votes Thank Flag Link Sat Aug 21, 2010
Mike, everything you say makes sense, except the SPR is the service release premium that is paid to a mortgage banker when the loan they fund is sold off for servicing, that amount doesn't change. I think you mean the YSP, which is something that can change a few times during the day, as it did today when the market worsened during the day.
0 votes Thank Flag Link Fri Aug 20, 2010
In concurrence with what others have said, that’s just unethical. Customers do not need to have 2 different lenders working for you side-by-side. I’m assuming you would be doing this to get the lowest rate. Most mortgage lenders have multiple sources of funds and will research for the best mortgage program for you. Locking the rate is a confirmation of commitment from both sides. I recommend this: before you commit to one lender, have the lender quote you the best available rate/fees and negotiate everything from there. Request for a GFE (Good Faith Estimate) and it will have a break-down of all the costs involved. The cycle of interest rates and SRP does change at least 4 times a day from where I worked. Most lenders have very competitive rates.
0 votes Thank Flag Link Fri Aug 20, 2010
It's no smarter to work side by side with 2 lenders than it would be to work side by side with 2 buyers agents, You will only shoot yourself in the foot.
0 votes Thank Flag Link Fri Aug 20, 2010
You have 27 good, unanimous answers already that spell out all the reasons you need to pick one lender early in the process and stick with them. The other thing to keep in mind here is that when a loan is locked, the lender has made a commitment to deliver this loan to a secondary market investor...when it isn't delivered, costs are still incurred, even if you were given the courtesy of a free lock. You should also be aware that, depending on your 2 lenders, it is entirely possible they have committed to the same end investor and you'll eventually be asked to choose, or you'll just be denied altogether. If everybody thought like this, then not only would rates and fees be higher, but more money will be asked up front from everybody as a commitment from you as the borrower. This is a case of one bad apple...and I'm sure you don't want to be the bad apple, do you? Besides, most loan officers will go out of their way to make sure their loyal clients have the best deal and experience possible.
0 votes Thank Flag Link Wed Aug 18, 2010
If this was an FHA loan, the FHA case number would be issued and assigned to the property. You can't have two lenders simultaneously on an escrow because the one lender would have to release the case number to the other lender. If you make one mad, they can drag their feet and drag out your escrow out of spite.

Most lenders are commission based. They don't get paid if the loan doesn't fund. Basically, what all the lenders are saying is that it is not right to waste someone's time by submitting an application and then playing the field. There is nothing wrong with shopping lenders, however... once you hear your options and are satisfied with the rate, you should commit to your lender.

I understand that a few bad apples in the business have ruined the reputation of all lenders. But if you have the opportunity to shop and your lender is capable of educating you on the loan programs, you don't have to be a victim.

Researching on the web is not giving you enough information to make an informed decision.

Here are a few obvious flaws in having two lenders at once:
1) There is a close of escrow date... most purchases take 30days.... if you start with one lender and switch to another... you will delay your close of escrow and possibly incur per diem fees
2) If you apply with one lender, and cancel and go with another lender.... if the second lender messes up... you may not be able to go back to the 1st lender because the loan was denied (assuming they'd take you back).
3) Different banks/investors have different guidelines. If you were approved with one bank, you may not be approved with the other. Not all lenders offer the same loan programs either.
4) Each lender will call the title company and agents for documentation and appraisal access.... it will be apparent that someone is not on the up and up

My suggestion.... shop lenders, go with the one you trust. Go with your gut. Be honest with your lender. Tell them your concerns so that they can help you alleviate them. Worse case scenario for a lender and you... you lock, the rates go down.... re-negotiate the fees or discuss the options. You may be able to go back to the seller and ask for concessions to cover the cost for the difference in rate. WIN WIN WIN
0 votes Thank Flag Link Wed Aug 18, 2010
Hi Jb, there are two things that need to perform up to expectations in order for a commitment to be finalized - the borrower (you) and the home (appraisal). My question to you is what are you trying to accomplish?If your concern is whether the credit worthiness of the bank will get in your way, then I would say take a step back and evaluate who you are borrowing from. Work with a reputable bank and have a direct contact, and that should soothe that concern and also provide a better and more successful experience than dealing with an impersonal 1-800 # scenario. Rate wise, do your rate shopping now and lock it in with one bank and get moving.

Your focus should be on finding the right house with the assistance of a great agent. Then do your shopping for a mortgage provider, and provide info requested on a timely and complete basis and unassuming your situation does not change markedly you should be fine.

The long and short of it is no, I dont' think it makes sense to work with two lenders in parallel. You'll have plenty to keep on track with just one.

Jeanne Feenick
Unwavering Commtiment to Service
Web Reference:
0 votes Thank Flag Link Mon Aug 16, 2010
While it is good business to speak with more than one lender while shopping around for the best rates and closing costs, it is best to settle on one lender at some point. I don't know many realtors who would allow you to do this while working with them. If all you're trying to do is get the best bang for your buck, then do that. Once you've done that stick with one lender.

And one realtor, too for that matter.
Web Reference:
0 votes Thank Flag Link Sun Aug 15, 2010

It is unanimous.

You have 20 answers (including mine) to your question of , "Is it smart to work with 2 different lenders side by side ..." not one of which is saying it is a smart thing to do. I think you have your answer, sir.
0 votes Thank Flag Link Sun Aug 15, 2010
While it's a good thing to shop around for the best rate/terms, you probably should tweak your plans. It's not necessary to lock a rate/terms until you're sure that you've obtained the best offer. Just make sure to get any rates/terms in writing, before you sign anything. Also let them know upfront that you're shopping around for the best rate/terms; they'll see it anyway when they pull your credit.
0 votes Thank Flag Link Sat Aug 14, 2010
Totally agree with Bernard - TU!

Here is a post that may be helpful:

I WISH You Would Use My Lender - 6 Critical Reasons Why You Should
0 votes Thank Flag Link Sat Aug 14, 2010
Shopping around before you Lock in is a good idea. Once you have found the rate you want I would suggest just using one Mortgagae person. What you have not said is if you are working with a Real Estate Agent. I would also ask them to recommend 3 Mortgage people. I have Mortgage people that I suggest my Buyers use ( they are free to shop around) and I know if these mortgage people yes we can get them a loan I know that part of the Real Estate puzzle is handled. If they it will be hard but they can do it then I am prepared for that also. Being in the business the mortgage people have to "clients" the person buying the home and the Real Estate agent(s) who send them business. A mortgage person would not stay in business with Real Estate agents if they say YES and then it becomes a No. If a Mortgage person does that to often they will not be getting Clients from Real Estate people.

Let me turn it around on you would you like to do all your work at your job and then find out that you are not getting paid?? I would guess not?? Just a thought. You may not know but the Mortgage people I deal with are on 100% commission. They don't get paid till after they do all the work, go to closing, fund the loan. Its not like an hourly, or salery job.
0 votes Thank Flag Link Sat Aug 14, 2010
Well now that you are starting the finger pointing let me remind you that the mess that this country (especially the housing crisis) is in is because of the terrible lending practices of folks from the lending industry. It is perfectly fine when you guys keep funding and approving loans of anyone walking in the office and now that the tide has turned you want ethics? Great job.
0 votes Thank Flag Link Fri Aug 13, 2010
reading this thread 3 years later, and i wholeheartedly agree with this response.
Flag Mon Sep 9, 2013
No it is not a FHA loan. So in this case you are saying that the rate can not be lowered even if the rates fall down to 3.75% before the close of escrow that is more than 45 days away?
0 votes Thank Flag Link Fri Aug 13, 2010
Jb, there is a big difference in shopping around for rate, and applying to 2 different people at the same time. I would encourage you to shop for the person who you feel will give you the best service, the lowest fees, and the best rate. But to actually apply to a new lender rather than trying to have the first person float your rate down would be terrible. The only rate that can't be floated down, as mentioned, is an FHA. If that is what you are going for, and I were lender #1, I would lower your rate and take less profit than assign your case number to someone else.
0 votes Thank Flag Link Fri Aug 13, 2010
First off thanks for all the input into this matter. All I am trying to do is get the best possible rate for my purchase. Each 0.125% decrease in rate will lower my payment by $40 a month. It might not seem a lot to you but 0.25% rate reduction will result in a monthly saving of $80 which equates to a total savings of approximately $15K in 15 years. How different it is from you shopping for a car? You know exactly which car you want and you shop around to find the best possible deal and service. If you don't than you are definitely not a smart person or your grandparents inheritance has kicked in.
I do realize that one of these guys will end up wasting a bit of their time but if they can not offer the best product (rate and fees) out there than it was probably my mistake to pick them in the first place.
0 votes Thank Flag Link Fri Aug 13, 2010
Especially on a purchase its highly critical to feel a sense of comfort working with one lender in the beginning otherwise it can possibly cause a delay to the closing date. This can possibly cost you hundreds of dollars since per diem interest can kick in which can be exercised by the Seller and that is a per day charge . Also, the Title Co. may question the fact that two lenders are working on the loan and that would most often be communicated to the seller.
0 votes Thank Flag Link Fri Aug 13, 2010
Getting a GFE 2010 is very important.
Understanding the closing costs and other charges is also equally inmportant.
However the most important decision lies, yes lies, in deciding the hour of the lock. This is where the money lies!!!

DRE 01790347
0 votes Thank Flag Link Fri Aug 13, 2010
Thank you all for the quick responses. I did do my homework before going with the first lender and locked the rate 2 weeks ago at 4.125%. All of a sudden the rates started dropping and I spoke to a second lender who suggested I do both lenders side by side. He mentioned that I will be loosing around $500 in fees and if I did not go with him I would be wasting about 15 hours of his time. But at the same time he was confident that he would be able to lock the rate at 4% or lower once we fall withing the 21 day lock period. So weighing the pros and cons I decided to go with him also. If he can lock me up close to 3.75% than it was well worth the effort and cost. By the way this is a 15 year fixed loan we are talking about.
0 votes Thank Flag Link Fri Aug 13, 2010
Hello JB
There is nothing wrong with getting two opinions for your loan, you can choose the best interest rates and also if they are charging you any points. However you should choose the one that you feel more comfortable that is very resourceful and have great deal of knowledge. You can switch the lenders as long as escrow and all involved parties are notify, I am not quite sure if there is any penalties just like Dave Sutton suggested make sure that you ask all this questions to both lenders, the more you ask the better educated you will be.

best regards
Ruth E Feast
0 votes Thank Flag Link Fri Aug 13, 2010
Hi JB...

It is always good to do your homework but I would recommend doing it up front. You run a significant risk now with Fannie Mae's new loan quality initiative. On every loan a credit report will be pulled before funding. With multiple credit pulls it could affect your score and pricing.

My recommendation would be to find a lender you can trust and feel comfortable working with and once the terms are agreed upon close the deal. I'm sure all parties in the transaction will appreciate it.

Please feel free to email me if you have any questions on the process.

Best of luck,

Web Reference:
0 votes Thank Flag Link Fri Aug 13, 2010
Nothing wrong with shopping your loan to several lenders. Not sure it's smart to go as far as you're suggesting with two, but if you're willing to spend the money....

Banks are getting really picky about lots of things, so even though I am not aware of any penalty for not proceeding with a loan after you have locked a rate, you would be smart to ask the question and read the fine pint.
0 votes Thank Flag Link Fri Aug 13, 2010
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