Stupid First Time Home Buyer Question About Lenders

[Anonymous]

I'm sure this is a very stupid question. I have two pre-approval letters from two different lenders. My agent and I are actively home shopping. What is the best way for me to get the best deal? If I submit one letter with my offer, do I have to stick with that lender should something better come along?

[Anonymous]

Why did you get two approvals? I hope it was close in time or else it will affect your credit. Why can't you ask your agent this question? If you submit an offer with that lender letter, you have to use them if you do a financing contingency. If you want to switch, then you have to get a new letter and new contingency. But really, why not ask your agent? That's what they are getting paid for.

[Anonymous]

OP here. Both reports were done on the same day. I wanted to see if there were any other opinions.

[Anonymous]

Anonymous wrote:I'm sure this is a very stupid question. I have two pre-approval letters from two different lenders. My agent and I are actively home shopping. What is the best way for me to get the best deal? If I submit one letter with my offer, do I have to stick with that lender should something better come along?

My suggestion to approach this, for you and others. Find a mortgage broker you like. Get pre-approved with them. Then get your house under contract.

Once the house is under contract, go back to your original mortgage broker. Ask them for their best price. Take that to 3-4 (or more) other mortgage brokers. Say your prior approval person (we'll call broker A) gives you 3.5 with zero points. Go to mortgage broker B, say, "I have 3.5. Can you beat it?" If broker B says no, then go to C. If broker B says "yes, I can do 3.375," then take that to broker C, and ask to beat 3.375. Repeat until you are sure you have the lowest price.

Then, go back to broker A and say "I've been offered X. Can you match?" If they can match, stick with the person you liked at the outset and did your pre-approval. If they can't match, go with whoever gave you the cheapest price.

There is a lot of play in these markets. Brokers make money on consumers who don't do their homework to figure out the cheapest price. You have to be aggressive in negotiating down if you want the best deal. Remember, few brokers will ever give you the best price unless they know they have to in order to get your business. Why would they leave money on the table? Just the same way, you shouldn't overspend. So take the time, and you'll save thousands and thousands over the life of your mortgage.

[Anonymous]

You don’t have to use the same lender issuing the pre approval letter for the home purchase. Find a mortgage broker who will shop around for the best rate for you and take your mortgage from there. The financing contingency removal just means that you have obtained the formal approval for the loan, it could be from any legit bank.

[Anonymous]

Anonymous wrote:You don’t have to use the same lender issuing the pre approval letter for the home purchase. Find a mortgage broker who will shop around for the best rate for you and take your mortgage from there. The financing contingency removal just means that you have obtained the formal approval for the loan, it could be from any legit bank.

Yes, I have no idea where that PP was getting his/her information from!!

[Anonymous]

Anonymous wrote:

Anonymous wrote:I'm sure this is a very stupid question. I have two pre-approval letters from two different lenders. My agent and I are actively home shopping. What is the best way for me to get the best deal? If I submit one letter with my offer, do I have to stick with that lender should something better come along?

My suggestion to approach this, for you and others. Find a mortgage broker you like. Get pre-approved with them. Then get your house under contract.

Once the house is under contract, go back to your original mortgage broker. Ask them for their best price. Take that to 3-4 (or more) other mortgage brokers. Say your prior approval person (we'll call broker A) gives you 3.5 with zero points. Go to mortgage broker B, say, "I have 3.5. Can you beat it?" If broker B says no, then go to C. If broker B says "yes, I can do 3.375," then take that to broker C, and ask to beat 3.375. Repeat until you are sure you have the lowest price.

Then, go back to broker A and say "I've been offered X. Can you match?" If they can match, stick with the person you liked at the outset and did your pre-approval. If they can't match, go with whoever gave you the cheapest price.

There is a lot of play in these markets. Brokers make money on consumers who don't do their homework to figure out the cheapest price. You have to be aggressive in negotiating down if you want the best deal. Remember, few brokers will ever give you the best price unless they know they have to in order to get your business. Why would they leave money on the table? Just the same way, you shouldn't overspend. So take the time, and you'll save thousands and thousands over the life of your mortgage.

There is more to choosing a lender than rate. A national lender with a poor reputation for closing on time isn’t worth it if it offers an eighth of a point lower.

[Anonymous]

Anonymous wrote:

Anonymous wrote:You don’t have to use the same lender issuing the pre approval letter for the home purchase. Find a mortgage broker who will shop around for the best rate for you and take your mortgage from there. The financing contingency removal just means that you have obtained the formal approval for the loan, it could be from any legit bank.

Yes, I have no idea where that PP was getting his/her information from!!

That's not true. It's probably been a while since you bought a house. The financing contingency changed in February 2019. Here is the verbiage.

FIRST DEED OF TRUST: Buyer will obtain OR assume a First Deed of Trust loan from the lender that issued the pre- approval letter...

ALTERNATE FINANCING: This Financing Contingency shall not apply to any Alternate Financing. Buyer, at Buyer’s election, may apply for alternate financing which includes but may not be limited to any change to the loan terms or change in Lender as described in the aforementioned Specified Financing paragraph above (“Alternate Financing”) provided: (a) Buyer is qualified for alternate financing; (b) there is no additional expense to Seller; (c) the Settlement Date is not delayed; and (d) if Buyer fails to perform at Settlement except due to any Default by Seller, then the provisions of the DEFAULT paragraph shall apply.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:You don’t have to use the same lender issuing the pre approval letter for the home purchase. Find a mortgage broker who will shop around for the best rate for you and take your mortgage from there. The financing contingency removal just means that you have obtained the formal approval for the loan, it could be from any legit bank.

Yes, I have no idea where that PP was getting his/her information from!!

That's not true. It's probably been a while since you bought a house. The financing contingency changed in February 2019. Here is the verbiage.

FIRST DEED OF TRUST: Buyer will obtain OR assume a First Deed of Trust loan from the lender that issued the pre- approval letter...

ALTERNATE FINANCING: This Financing Contingency shall not apply to any Alternate Financing. Buyer, at Buyer’s election, may apply for alternate financing which includes but may not be limited to any change to the loan terms or change in Lender as described in the aforementioned Specified Financing paragraph above (“Alternate Financing”) provided: (a) Buyer is qualified for alternate financing; (b) there is no additional expense to Seller; (c) the Settlement Date is not delayed; and (d) if Buyer fails to perform at Settlement except due to any Default by Seller, then the provisions of the DEFAULT paragraph shall apply.

You don't HAVE TO use the same lender, but after ratification, the seller needs to agree to the change and resign the financing contingency.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:I'm sure this is a very stupid question. I have two pre-approval letters from two different lenders. My agent and I are actively home shopping. What is the best way for me to get the best deal? If I submit one letter with my offer, do I have to stick with that lender should something better come along?

My suggestion to approach this, for you and others. Find a mortgage broker you like. Get pre-approved with them. Then get your house under contract.

Once the house is under contract, go back to your original mortgage broker. Ask them for their best price. Take that to 3-4 (or more) other mortgage brokers. Say your prior approval person (we'll call broker A) gives you 3.5 with zero points. Go to mortgage broker B, say, "I have 3.5. Can you beat it?" If broker B says no, then go to C. If broker B says "yes, I can do 3.375," then take that to broker C, and ask to beat 3.375. Repeat until you are sure you have the lowest price.

Then, go back to broker A and say "I've been offered X. Can you match?" If they can match, stick with the person you liked at the outset and did your pre-approval. If they can't match, go with whoever gave you the cheapest price.

There is a lot of play in these markets. Brokers make money on consumers who don't do their homework to figure out the cheapest price. You have to be aggressive in negotiating down if you want the best deal. Remember, few brokers will ever give you the best price unless they know they have to in order to get your business. Why would they leave money on the table? Just the same way, you shouldn't overspend. So take the time, and you'll save thousands and thousands over the life of your mortgage.

There is more to choosing a lender than rate. A national lender with a poor reputation for closing on time isn’t worth it if it offers an eighth of a point lower.

To the extent that there is any doubt about whether a particular lender can close on time, you can almost always leverage your lowest rate into a match by someone else. Through hard work, most buyers can save 1/4 point, perhaps 3/8. Perhaps 1/4 with some lender credits. Too few buyers actually do their homework, and they wind up with whatever lender pre-qualified them at whatever price that lender tells them. Great for the lender--and an overpay by the buyer.

[Anonymous]

Go with whoever has the cheapest rate.