<p>Are there any particular things to look for when choosing a lender? Our son is buying a condo and working with a smaller lender “Mortgage Master Inc” who is waiving the application fee and paying for the appraisal. No points.</p>
<p>My husband states in no uncertain terms (but with no reasoning to back it up either) that he should go with Bank of America who has served us faithfully for so many years.</p>
<p>Same interest rates in both cases. No points. But some other small fees with BoA, under $1000</p>
<p>Can one apply for a loan with a lender and then switch to another lender a week later because rates have dropped? Is there any downside or legal implications?</p>
<p>The only potential problem with starting loan applications with multiple lenders is that they will each pull credit reports, which could adversely impact your son’s credit score. In most cases, though, lenders will see multiple pulls of the credit report at approximately the same time as one application, and will discount any impact.</p>
<p>I feel no loyalty to any one financial institution. So we’ve used at least 3 or 4 lenders over the years. In many cases the mortgage loans we’ve gotten with lender A have been sold to lender B. Personally I see no reason for your son to give several hundred dollars to BofA just because his parents have been customers for many years.</p>
<p>Yes, you can switch lenders in mid application. The only thing you would lose would be any fees you’ve already paid, for appraisal, loan application, rate lock, etc.</p>
<p>He can also apply with a lender and not lock in (your post seemed to suggest he would switch because rates had dropped but if he hasn’t locked in at the first lender, rates would have dropped there too). He could also ask Mortgage Master what their policy is if he applies, locks in, then rates drop. They may have a “float down” or some other option to bring his rate down even after he’s locked.</p>
<p>Well they have offered to split the difference if the rate drops within 30 days of closing. So if it drops 1/4 they will give 1/8 to him, but I don’t see any deal here. However since they have waived the app fee I think there’s nothing to lose with switching in a week?</p>
<p>We filed mortgage applications with two of our Credit Unions. One had their own in-house mortgage office, the other worked with a larger network. One had no application fee at all, the other had a small fee ($75???). Our home was a short sale, and when the seller’s bank approved the purchase, Credit Union A did not have enough lead time for the paperwork, but Credit Union B did. Our mortgage is with B.</p>
<p>Both offered similar interest rates, and had similar inspection/appraisal charges and the like. We did take advantage of the float-down feature offered by B.</p>
<p>Sometimes the downside with a small lender is you never know who will end up servicing you loan. With small lenders most probably your loan will be sold and the servicing company might be not up to par to the one that services larger lenders such as Bank of America. It might happen with larger lenders too, but in my experience it happens far few in between.</p>
<p>In commercial lending servicing company is very important, they might impose a different rule of examine the operation than the bank who made the lending.</p>
<p>However, in home loans, there is very little the servicing company can do if you pay on time. It does make a difference on defaults and foreclosures. In many foreclosure buying, I have seen many large lenders selling portfolios among themselves. Merrill Lynch to BOA and then to BoNY etc.</p>
<p>I was referring to customer service and support done by small servicing companies. For example, I would not recommend setting up an online account with many small servicing companies. The risk that your account can be hacked is very high.</p>
<p>When we purchased our house about a year ago, we had quotes up to the last day of “locking in” from three major local banks, each of our credit unions, the mortgage company referred to us by Costco, and a local mortgage broker. Leading up to the final day, Wells Fargo had the lowest rate by about 0.25%. When we were getting all the paperwork ready, everyone had jumped up in rate except for the mortgage broker’s rate, which had actually decreased. We went with her, and things went fine. As soon as the paperwork went through our loan was sold to the government and servicing went to one of the banks we were shopping with from the start.</p>
<p>This is going to be in New Jersey.
How does one negotiate the float-down?
The broker is offering to lock in at 4.125 and only if the rate drops by 1/4 or more, within 30 days of closing, will he “split” the difference, so lender gets 1/8 and son gets 1/8 (essentially bringing his rate to 4%)
Is that normal to lock in, and then split?</p>
<p>We are about to close on an apartment in few days. I went with my large bank for the mortgage. The service I got from them was a lot better than with a mortgage broker I used before. I have locked in the rate for 3 months, assuming it was sufficient. Unfortunately the seller decided to delay the closing because his new apartment was under construction. My mortgage banker was able to use my rebate to extend my rate lock. Ask MM what happens if closing gets delayed, how easy would it be for them to extend the rate lock. </p>
<p>We started to look for an apartment beginning of this year. This banker issued us a lot of pre-approved letter. He even did it once when he was on vacation.</p>
<p>By having another float down that’s better. Honestly. The only way to get better terms from this lender (and it doesn’t sound that bad) is if your son had another lender who is offering him better float down terms. So he would tell Bank A “I’m going to Bank B who is offering to float me down even if rates drop 1/8%”.</p>
<p>If he really wants to try and get the best rate, he can apply to both banks, lock one, float the other. This way if rates drop where he’s floating, he can lock in whatever their current rate is. It just means a lot of extra time and paperwork on his part. Plus probably 2 appraisal fees (one at each lender).</p>