You can do it IF Lender A acts quickly to move the appraisal and case number to Lender B (I have seen companies drag this out for weeks) and if Lender B is very efficient. HOWEVER to be on the safe side, here is a suggestion: if you want to close with Lender A make sure you pay NO POINTS even if the rate is high. FHA offers a "streamline refinance" which most lenders (including me) do with NO CLOSING COSTS to the borrower. I do these streamlines all the time and no appraisal is necessary and very little documentation is required. Basically we just issue a new loan number and new payment. So, right after you close you can streamline into a new loan number and rate. If you want more of an explanation, call me or email. Lender A probably won't be too happy if you do it, but it is perfectly legit.
Ruth Bonapace
bank of America Home Loans
201 741 5269
ruthbonapace@bankofamerica.com
ruthbonapace@gmail.com

I think Bob's answer was pretty good. Lender B is clearly looking to profit off of a recent dip in rates. It doesn't mean they are a better lender or even have lower rates. There was a reason you chose lender A in the first place and often when rates drop we as lenders are caught in the middle because it costs us money to re-lock an interest rate and it's not as simple as waving a magic wand and giving you the lower rate.

I would definitely approach lender A about reducing the rate. Maybe they can't match the lower rate but they can meet you half way. They've worked on your loan in good faith to this point, they deserve that chance.

Also consider the impact of switching and whether you risk being penalized or losing the home altogether if they arent able to close on time. Is it worth it?

Having done hundreds of FHA loans in the mortgage industry, I can tell you the normal processing time from start to finish is 30-45 days. That's not saying they can't be turned around quicker, just that the closer you cut it the more you risk messing things up.

Best of luck

Newbuyer,

Yes there will only be one FHA case number and if you go to lender B, they will have to get that number from lender A. .375 % is it worth all the hassle over a $400 appraisal fee?

It is still going to cost you .. the application fee and the frirst appraisal fee. But hey... go for it if the math makes sense for you.

Where did lender B come from? Who do you trust? Is lender B going to do the ole' switcher-oo at the last minute? Have you gone back to lender A to offer a competing rate so you don't have to start all over? He/She may be able to look at a different lender (if a broker) and find something better. Better to have some commission than none at all. Lender B may not accept the appraisal if the buying lender doesn't like the numbers. Is the Seller willing to wait until you close? Will they charge you more in interest lost if you don't close on time (if they are buying a home with the sales of their home to you, you may be holding everyone up). If there is a problem switching and you are a first time homeowner, pay your rate down the amount and use the $8000 from the government (income qualifying willing) and pay yourself back.

Thanks Chuck. The problem is here that I can not pursue both loan applications because the loan is linked to a FHA case number. Only one lender can have the case number (or that's what I am told...)

today the rate difference between lender A and lender B is .375. Fees/points very close, but lender B promises a refund of appraisal fee at closing.
Thanks for you answers! I really appreciate it.

Congratulations Mr. NewBuyer. Based on your set of facts, you need to do a few things. If you have a Commitment from Lender A, what are its terms? Generally, the loan underwriter will produce a list of "exceptions" to the commitment that your lender (loan officer or broker) needs to satisfy one by one. You don't really have a commitment until then. With it being 3 weeks away, I am presuming that you haven't gone through that process yet. It involves things such as verifying assets, bank account information, earnings, explaining some item or items on your credit report etc. Make sure that you have a commitment with no exceptions or all exceptions satisfied and signed off by the underwriter.

With respect to lender B, it is not likely that you have enough time to get the loan done. Even if he can use the same appraisal, finishing up a loan in 3 weeks and coming through on all of his promises would put him or her in my top 5% of all lenders. That would be quite a feat. I can't say something that good ever happened for me.

You should be able, if you'd like, to pursue both loan applications. If lender B would be willing to proceed with that understanding, then why not? Most likely you are only risking an application fee and all or a portion of that may be made contingent on Lender B coming through - he is the one making this promise, right? So he'll get the application fee if he comes through for you.

Otherwise, you should stick with your most certain thing - just make sure how certain it really is.

Best of luck,

Chuck Mineo

Big Risk. Also if you are already locked.. it is going to cost you to leave the current mortgage. I can not believe that the rate you have and the one you will get will be that big of a difference worth all the refiling of paperwork, appraisals and what have you that is neessary.

And again.. it will probably cost you some $.

I forgot to add that I am locked with lender A and that is why, he told me, he could not change my rate...

Thats a pretty big gamble.. the question you need to ask "Is the rate and fees worth that risk and stress?" Changing the interest rate .125 or a .25 really shoudnt changed your monthly payment all that much. My suggestion would be to try Bob's suggestion. Its a good one.

Danny Castagna

good morning...approach lender "a" with the pricing and terms being offerd by lender "b"...the most expedient way to get the better deal would be to remain with the lender you currently have....changing lenders, despite what you're told, could take you outside the window to close..lender "a" could switch investors faster than you can change mortgage lenders...if you are not locked at lender "a".there would be no need for them to even change investors, they could just grant you the lower pricing..assuming they have the ability to do so.....i hope that helps......best regards..bob mcclure- success mortgage partners- plymouth, michigan.....