The Money Mustache Community
Learning, Sharing, and Teaching => Real Estate and Landlording => Topic started by: jhlr on June 30, 2016, 03:47:57 PM
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I am refinancing my mortgage. At the start of the process, I contacted two mortgage brokers and one was an 1/8th% lower rate at the same closing cost; I went with that guy (broker A). A week later the other broker (broker B) said he could do 1/4th% lower than where he was. I asked broker A if he could roll me down and he said he could not. My question is, is it okay to leave broker A for broker B after his firm has done some work on the loan already? I know I have legal obligation to broker A but should I still stick with him?
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I am refinancing my mortgage. At the start of the process, I contacted two mortgage brokers and one was an 1/8th% lower rate at the same closing cost; I went with that guy (broker A). A week later the other broker (broker B) said he could do 1/4th% lower than where he was. I asked broker A if he could roll me down and he said he could not. My question is, is it okay to leave broker A for broker B after his firm has done some work on the loan already? I know I have legal obligation to broker A but should I still stick with him?
What did you sign?
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Legally - agreed that you need to read what you have signed. I doubt that you are obligated for much. Maybe any prepaid items like an appraisal. But it's best to double check.
Morally - broker A provided you a quote matching your need and you accepted. Acceptance likely included a rate lock. Afterwards rates may go open, down, or both but it doesn't change your original need and subsequent agreement. If you were shooting for a lower rate, you could have started the process with broker A but waited on a rate lock.
I won't say this is black and white for everyone. Me personally, I would stick with broker A. Now should the rate change by a lot more, say 0.50%+, I bet there is a point were my morality begins to crack.
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Agree with read your contract. After that it's personal decision what you are comfortable with. For me, Broker A and Broker B are 1) not my friends and 2) not businesses I'm going to be dealing with multiple times in the future. That argues (theoretically, not comfort zone-wise) for hardball. Broker A and B, if they are good at what they do, will not hesitate to get the best deal they can when they sell your mortgage and servicing rights. So I would ruthlessly go for the best rate. Maybe you can get a bidding war going . . . 12.5 basis points ain't chump change over the life of a 30 year mortgage.
I cancelled a refi day of settlement after redoing some financial calculations, my Broker A was pressuring but I determined it wasn't worth it (it was a trade off with rate vs. losing the mortgage insurance). Pulled the plug even after sinking appraisal and title search fee (that's why they're called sunk costs; don't include them in your going-forward analysis). When rates dropped again and I had more equity, Broker A wouldn't return my phone calls. Found Broker B and got a good deal. Broker A's loss and not my problem.