Switching Lenders

I’m currently in the process of closing on a house in 2 weeks and locked in at 6.875% no points on a $500k loan (30Y conventional), and I was planning on following through with this lender. However, I have some friends in the industry who mentioned that they have lenders who can give me a 6.5% no points and a $1200 lender credit given my financial profile. I know that this new offer is “better”, I’m worried that the timeline is a bit rushed by throwing in a new lender in the mix this late in the game as well as being out my good faith deposit with my current lender may not be worth the squeeze. Would y’all pursue the offer with a lower rate in this scenario?

To add some more details, I plan on contributing at least an extra $50k towards principal every year, and I’ll also be out an extra $600 from a good faith deposit.

Im a lender and don’t think switching two weeks prior is worth it plus I don’t believe they’re at 6.5 no cost with a 1200 credit for conventional. You’ll be refinancing next June anyways so it’s a small spread from now till refinancing. Important thing is the house itself

@Zion
Makes sense, I think I just needed the right nudge to get my head on straight. Thanks!

@Zion
I’ll be closing on new construction in March but curious what makes you think OP will be refinancing next year?

@Zion
Based on the current trajectory it seems unlikely rates will be back down in June

If those lenders are truly that much better (doubtful), you can refinance with one of them in the future. You’re two weeks from closing and have earnest money on the line. The other lenders can make whatever promises they want to try to get you to switch, but they’re unlikely to get you closed on time or get the appraisal done within your objection deadline in your contract.

I can turn a conventional loan in 2 weeks easily, but I would still recommend you stay the course. Your rate is already pretty good, and you’re almost to the finish line.

@Cypress
Thanks for the word of advice. In my head, the appraisal seemed like the bottleneck, but the new lender was mentioning that I could just transfer the appraisal from the previous lender to expedite the process which is why I wavered. Also having to deal with one less set of processes now is a good sell to me right now since I’m quite frankly exhausted between dealing with the home purchase, work, and life events.

@Jordan
Typically you can’t transfer an appraisal on a conventional loan, only an FHA loan

Koa said:
@Jordan
Typically you can’t transfer an appraisal on a conventional loan, only an FHA loan

Most will take a transferred appraisal these days with a certification it was ordered within the rules but the lender has no real reason to help expedite that unlike FHA where they have to

@Ben
Definitely switch. Sabotage your home purchase to save a few bucks. Your ‘friends in the industry’ tell you how volatile the market has been and rates have shifted .125-.25 in a single day regularly? So their ‘6.5’ might be 6.75 tomorrow. Stick with the lender that’s done the work for you. So annoying to see consumers just not give a damn about people literally spending their life working for them, likely in a commission-only role. Be a better human.

@Jordan
You can’t transfer the appraisal unless the current lender allows it. The appraisal belongs to them and they don’t have to transfer it. And if they do, they certainly don’t have to do it in a timely manner.

@Jordan
What if you’re not in a position to refinance? Now you’ve potentially paid more for a higher rate.

Just like the guy above said he can wrap it up in two weeks…anyone can.

Ask your agent if extending closing is an option.

@North
Meh I already made my bed with this, and honestly a 0.375% spread probably isn’t worth it in the grand scheme of things since I’m planning on aggressively paying this sucker down. If our HHI stays stagnant and we don’t refinance, we should be able to pay this thing off in 8 years at a $8k ‘loss’ due to the spread. The alternative is that I lose my earnest money and more importantly the house, at which we’re already emotionally attached to.

Go for $0 cost loan with current lender and refinance after closing. Dont screw up your home purchase.

No if you want the house you stick with the current lender. Everyone knows a better lender in a vacuum.

The market has been getting brutalized over the last week.

Your friends are full of it OR their referrals are. Stay the course and close with your current bank.

These offers all sound bad. If you’re going to jump ship, do it for the best. Otherwise just refinance after you close and get a better rate down the line
Changing lenders isn’t a big deal. Everyone knows contract dates are extreme priority - as long as you answer questions quickly and don’t drag your feet with documents you’ll have no issue switching and closing on time

Don’t listen to friends and coworkers for anything financial is a pretty safe rule to live by.

They likely got those rates pre early October, and they don’t realize rates tanked since then… They just see what they received, or some friend told them they received…

Pretty rare that anyone not in the industry has any real clue. They do often have a huge amount of confidence though…

Once Trump triggers a recession with the tariffs the Fed will have to start buying bonds and mortgage backed securities again to save the economy… Rates will drop then. You’ll probably refi twice if my guess is correct on how rates will play out…

@Reagan
Yeah this particular family friend is a mortgage broker and has known my family for longer than I’ve been alive, which is why I considered this despite my gut initially telling me 2 weeks is too short. I’m fairly confident in the 6.5% rate because that’s their line of business, but the timeline is what I’m much more concerned about.

@Jordan
They’re probably cutting you a special deal then, and if it’s a simple loan they could probably do it in 2 weeks… Does bring in risk as your current lender will see the credit pull, so it could at a min create a delay proving that you’re not getting financing on another house…

The up front cost variance isn’t too substantial, but three eighths on half a mil will add up… Yet it’s also not life changing. It’s less than $2k a year in interest savings… If you’re looking at a TV $2k is something you’ll feel when you spend it. The mortgage it won’t be as noticeable…

I just pulled rates on a lender that almost always beats everyone, and to do 6.5 we’d be doing it at a pretty strong discount in costs…

Definitely feasible, just not a huge impact to your overall life for the savings, but losing the house would be… More likely just pay penalties to stay in contract… If you try this I’d ask them now if they can bump you out a week at no cost…