Changing lenders mid-process... downsides?

[Anonymous]

We had a preapproval on a VA loan from one bank, and put it in our contract, and started the full application process with them. We fully intended to go with them until we noticed one of our other banks was advertising lower rates on the same kind of loan (30 yr VA). When we called and gave them all our information, they gave us a rate that was more than .5% lower than the first bank. What?!!! I'm assuming it's typical for people to shop around different bank quotes once it's time to actually get settled, but does this muck up the process at all to switch mid-stream? We're only about 1 week since we signed the contract and still have about 40 days til the agreed settlement. I know we have to submit a form to the seller that we're changing lenders, but is there something I'm missing or is this a no-brainer switch we should pursue and be thankful for?

[Anonymous]

It's a no brainer. But, you might want to give your current lender an opportunity to match the low rate (and thus simplifying everything for you).

[Anonymous]

VA Loans should all be very close in rates.

Also watch out for funding fee, some banks will credit it some won't.

[Anonymous]

We called the first bank and asked them to match and they said nope. I'm waiting for the confirmation in writing from bank 2 to fully cancel bank 1, though. I'm almost thinking "this has got to be too good to be true..."

We're fortunate (?) in that DH has 10% disability so we're exempt from the funding fee.

[Anonymous]

You will likely still be charged something by the first bank -- application fee, and appraisal costs incurred, etc.

[Anonymous]

Anonymous wrote:You will likely still be charged something by the first bank -- application fee, and appraisal costs incurred, etc.

OP here... understood. I hate paying for nothing, but at the same time, this difference was enough to mean $500 less each month. I am still holding my breath to make sure it all checks out in the paperwork.

[Anonymous]

Anonymous wrote:

Anonymous wrote:You will likely still be charged something by the first bank -- application fee, and appraisal costs incurred, etc.

OP here... understood. I hate paying for nothing, but at the same time, this difference was enough to mean $500 less each month. I am still holding my breath to make sure it all checks out in the paperwork.

If it's a $500 difference I don't know how you couldn't switch. That's a lot of money!

[Anonymous]

The two banks just quoted rates on different days. Usually once a bank quotes it is contractually bound to its investors not to lower the rate, so nothing funny is going on.