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I Want A Loan…, Home Buyer in Bergenfield, NJ

Renigotiating a rate lock / finding another lender

Asked by I Want A Loan 2342343, Bergenfield, NJ Mon Oct 10, 2011

I'm locked in with Chase on a 30 year fixed conventional 20% down. Loan of about 350,000, both me and my wife have great credit. Rates are now about .125-.25% cheaper. They wont renegotiate until we are within 30 days of closing, though once I am within 30 days of closing I have a lot less time to contact another lender if Chase decides not to renegotiate. They also told me if I did apply with another lender they would find out and cancel my loan. Is that just a threat to keep me from looking around, or is there actually some rule that says I can't work with 2 banks at once?

Thanks

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@Ryan, great job of defending your home base! :). Seriously, my fellow professionals have answered your question quite well. Most lenders are not going to be the "best" in the market on every transaction...however, I can guarantee that I will close the loan on time and with the terms we agreed upon. I can provide in depth financial counseling to ensure you are making informed decisions for your specific situation and goals. I provide knowledge, ethics and commitment to each and every client.

An 1/8 of point on a 350,000 is somewhere around 20 to 25 dollars. You are going to risk a transaction, pay double fees, go through incredible stress for twenty bucks? Hey, apply online to a company you have never heard of and probably won't hear from for weeks at a time after you apply....lose the contract and/or miss the refinance opportunity altogether. Sounds like a great plan.

All scarcasm aside, I do get that you (and every consumer) wants the very best possible deal. But mortgage financing is like everything else: cheapest is not always best. Best of luck to you.
0 votes Thank Flag Link Thu Oct 20, 2011
Having originated for more than 10 years, I have seen this scenario all too often. This is the classic case of buying stock today, wanting to sell the stock back tomorrow at today's price and buying it back tomorrow with no loss at tomorrow's price because it it lower. The scenario itself is just as crazy as trying to figure out what the hell I just said. When you commit to buying a home and commit to a lender, you need to be happy with where the payment is at the time you lock. Similar to stock prices, mortgage rates are constantly changing. They can change multiple times during the day (I have seen them change as many as 7 times in one day). Trying to catch the rate at the exact moment that it is its lowest is something that we all wish we could do, but unfortunately, it is not a reality. The mortgage process can take up to 60 days for a purchase loan these days with any major bank (Wells, Chase, BoA etc). Refinance loans can take up to 6 months. This is because of the huge volume of loans that are being pushed through the system due to the low rates. Restarting the process with another lender to shave an 1/8th to a 1/4% off your rate, which you certainly have the right to do, is crazy when you consider that you have a contractual obligation to close on or before a designated date per your sales contract. You will also incur new appraisal, credit report, and commitment fees from the new bank and possibly run the risk of forfeiting your deposit with the seller because you can't close in time. Additional risks of changing lenders include: your score drops when the new bank pulls your score, which in turn adds an additional rate adjustment of 0.25 -.05% to your rate, which negates your whole purpose; the new lender has additional underwriting overlays over the standard conventional underwriting policies that you don't find out about until it is too late, the new lender may not fund loans in a certain condo / townhome development (if applicable) --- the list goes on. I worked as a loan officer for Chase, so I can assure you that they won't cancel the loan, but if they know you are shopping them, they will be a whole lot less inclined to get your loan done quickly for you, which will definitely not help your cause to close on time per your contract. The only time you truly can't work with two banks at once would be if you were doing a government loan (VA/USDA/FHA) because a specific number is attached to the property in question and two lenders cannot be registered at the same time. When a bank locks a loan, they are taking a financial risk that the rates will plateau or go down by the time you close. If the rates go up, after you lock, they will be taking a loss. If the banks always let people in and out of their locks, they would never get ahead because they would always be taking a loss at that point - they need some peoples' rates to be higher than the rates post lock. The borrower never ends up winning in this scenario unless the rates are really that much lower where you are actually really getting ahead (>0.5% change... at least) AND you have plenty of time until closing - typically seen in non-arms length transactions where the buyer personally knows the seller and feels comfortable with contractual extensions. The added stress and additional costs will come to a head when you lose the house because got greedy and tried to beat the system. I wish you good luck.
Ryan McPartland
Investor Support Forensic Underwriter
JPMorgan Chase Bank
ryanjmcpartland@gmail.com
0 votes Thank Flag Link Thu Oct 20, 2011
There is no rule that says you can't work with 2 or more banks at once, you should actually speak with several banks as part of the pre-approval process - however since you are already under contract you should really figure out who you want to work with and stick with one or you'll be paying for double appraisal fees, etc. and quite frankly if one lender finds out another one is doing the loan for you as well I don't see them being incredibly motivated to continue to do the level of work they are doing on your loan, and may just refuse to continue to do so. But really, .125% lower in rate and you want to jump ship? Seems pretty fickle.
0 votes Thank Flag Link Tue Oct 11, 2011
You definitely can speak to another lender about this, and you should. They will give you the pros and cons, but you need to consult a lender that is completely reliable and well known. Chase is a huge bank that likes to throw its weight around -- either go to a smaller savings bank with great rates, like Bogota Savings, or call Tammy Lambert at Coldwell Banker Home Mortgage (201-213-1511) and she will let you know if they can do it in that time frame -- it probably can happen. Good luck and congrats on buying at such an auspicious time!
0 votes Thank Flag Link Mon Oct 10, 2011
I want A Loan,
A rate lock is a commitment. While lenders will sometimes offer a renegotiation of the rate or fees, depending on the difference, they have essentially set aside that money for you. If the bank is committed, but you are not, it's an imbalanced relationship.
Locking long term in this environment is always a risk. If you are not within 30 days of closing, I'm not sure renegotiating the rate is in your favor anyway. Rate locks are typically for a set period, 30, 45, 60 or 90 days. The shorter the term, typically the cheaper the fee. Are you buying new construction?
As far as "will they find out" they can and will update your credit report to see if you've had any significant changes. This is not the time to buy a car or max out a credit card. Any credit purchases should be run past your loan officer to ensure you don't jeopardize your loan. An inquiry from another lender would be visible. Whether they would cancel your loan or not, I can't say. It's up to you to decide if it's worth the chance.
0 votes Thank Flag Link Mon Oct 10, 2011
Each lender has its own policy toward ratelock renegotiations. You are able to begin the process with another lender if you so choose. However, keep in mind that your file will not transfer and you will be starting from square one with a new lender. If you have already gotten an appraisal, then chances are a new one will be needed. You should weigh the monthly savings gained from the lower rate versus any potential penalties you may incur from your existing lender/services you have already paid for that can't transfer. Of course, if you do decide to make a move, feel free to call me and i will give you our best offer.

Albert "Al" Rapoport
NMLS ID# 60865
AVP - Business Development/Branch Manager
InterContinental Capital Group
A BBB Accredited Institution
70 Hudson Street, Ste. 4A
Hoboken, New Jersey 07030
Tel: 201-809-9905
Cell: 908-244-8107
Efax: 973-774-7026
Email: Arapoport@icghome.com
0 votes Thank Flag Link Mon Oct 10, 2011
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