Home Buying in Indianapolis>Question Details

Mike, Home Buyer in Indianapolis, IN

I think I know the answer to this already, but just to be sure:

Asked by Mike, Indianapolis, IN Fri Jul 11, 2008

A, and then say, 3 weeks later I put in an offer on a house and it's accepted. I go back to Loaner A, and he tells me the rates have increased. I find that Loaner B has a better rate/fees than Loaner A does...can I use Loaner B even though I was preapproved from Loaner A, with no penalty? (In other words, does getting a preaproval from a loaner put me under any sort of obligation to that loaner?)

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If you just have a pre approval, you should be under no penalty to shop around, But hey, this is America and capitalism rules! You are always free to move to a better deal if it presents itself. Just realize their might be penalties. You might loose an application fee, your appraisal might not transfer to a different lender and you might be under time limitations in your contract to get your deal closed. Even with those penalties, if rates droped 1.25%, it still might be in your interest to pay the penalty and cut your losses to move on to the lower program. Keep in mind that Rates are only one part of the formula. You have points and closing costs as well to consider. Lets say you have a 6.5 % zero point loan now. You get offered a 6% loan. Sounds good so far.....But what if that 6% loan will cost you 3 points. Not looking so good now is it. Make sure you are compairing apples to apples. Should you pay points to lower your rate? Sometimes it's a good idea. You need to break down the difference in your payments, your savings if you will. Then figure how long you will realistically be in the home. If your savings recoups the money you paid in points in a relativly short time, the rest of the years you are there, you are saving that money. Good loan officers and real estate agents will point this out to you and present your options.

Additionally, make sure your new lender offering the low rate is legitimate. You could in fact be low balled, only to find out later the lender cannot commit to his rate/ program that he offerend you. Classic bait and switch. Use reputably lenders, get it in writing, buy and enjoy your home!
0 votes Thank Flag Link Sat Jul 12, 2008
Nice post Mike!
You need to find out if the loan was locked. If not chances are lender a may have lower rates. You must be sure that you are comparing apples to apples.

Since lender B states that they came in with lower rates they also know that you have been working with some else and have just "low balled" your quote.

I will say that rates are all over the place. This week alone rates have gone down 1.25% and then back up 7/8th today. It is a roller coaster.

Work with a broker that will put closing cost guaranteed in writing and provide a valid rate lock. It is the best way to insure that you will not have surprises at close.

If you want, call or email and I will take a look at your deal and let you know what your looking at. I do not steal business, I just want you to be sure that you are getting a fair shake.

Also remember that it is not just about rates. When you get away from par rates it is a seasaw. The lower the rate the higher the closing cost and the higher the rate the lower the closing cost. There is always closing cost, just depends on how they are listed on the HUD-1.
Thanks. Tony - 317-714-8080
0 votes Thank Flag Link Fri Jul 11, 2008
Might be a good idea to ask for a Good Faith Estimate from your Lender so you will know what the charges are from the different Lenders. Just remember it is an estimate though.
0 votes Thank Flag Link Fri Jul 11, 2008
No penalty...if you only received a pre-approval you can shop around with multiple lenders. I would at least give the lender who gave you the pre-approval the chance to match or beat the rate as they've already put some work into the deal. If they can't do it, take the better deal.
Web Reference: http://IndyBetterHomes.com
0 votes Thank Flag Link Fri Jul 11, 2008
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