Use same old lender with higher interest rate or new lender with lower rate?

[Bearded Man]

I've used the same broker on the last two houses I've bought. It is nice to have him available, as I've been working with him for five years and he is very responsive. It's also nice to log into one system to pay my mortgages, however; Sebonic is offering 3.6% with no lender fees (saves me about 1K) vs 4% and about 1K that my old broker is offering for closing fees.

The difference in payment over 30 years is about 46K with the difference between payment and principle, not counting interest I could earn on that money. On paper the better business decision is to go with the lower rate, and I'm certainly leaning in that direction, but is it?

I like the relationship I have with my old broker, and being able to log into one system to pay my mortgages, however, I don't think it's worth 46K+, as I can setup auto payment through the two different sites and not have to monitor directly (actually already setup for the two mortgages I have with my existing lender). Once the loan is in place, there doesn't seem to be that much difference in service, but there sure is a difference in money I keep in my pocket.

[TheNick]

I'd have some loyalty to the guy if he was giving me sweet deals...but he's obviously not, so I'd be going for the best business deal I could find instead.

[slipslop]

It's worth telling the broker you like about the better rate and lack of fees--he might have some flexibility there. Having two competing lenders certainly worked out to my advantage when I bought a house, in terms of rates and fees--and I ended up going with the one who was originally higher (and I liked better) when they agreed to match the cheaper one's fees.

[Another Reader]

Are you comparing apples to apples?  Is the property being financed as an investment property or as owner occupied?  Are you looking at Sebonic's posted rates or have you gone through the numbers with the Sebonic rep?  Have you comparison shopped Aimloan or any of the other bare bones, online only lenders?

Talk to each of the lenders and give them the same information.  If the broker is still that much above the others in rate and fees,I would offer him the opportunity to match the competition or come close.  If he can't I would thank him and move on.

[Bearded Man]

I went through the process over the phone with one of their reps. I must say, I am heavily leaning the other direction after he just called me back. I was reading the reviews on yelp about the constant delays, horrible service once you lock, and constantly increasing fees each time you talk to them. Sure enough, when he called, although the rate on a 30 year fixed mortgage had stayed the same, all of a sudden there ware $1,600 in lender fees. I am now inclined to believe the horrible reviews on yelp. It hurts to pay an extra 46K a year over the life of the loan but 1) I don't want to risk losing the house due to delays 2) it's potentially worth the relationship....Maybe. I am considering selling my other single family houses and using the proceeds (via 10-31 exchange) to buy an apartment complex, and this guy can help me navigate the waters and determine what's better for me, commercial vs. residential (depending on the size of the complex).

I don't trust Sebonic now, but it is still hard to eat the 46K...

[TomTX]

So ask your guy if he can do better.

[Another Reader]

Will Aimloan do this loan?

[Bearded Man]

So ask your guy if he can do better.

Already did, that 4% rate came down from 4.125% and fees cut by 1/3.

Not familiar with Aimloan...Googling.

[Bearded Man]

So AIMLOAN looks like they have a good web site and good reviews. I could get 3.87% APR, or pay 6K more in points and get 3.37%.

Now let's say it comes down to .11% difference without paying extra points to buy down the rate; would you still go with AIMLOAN or stick with existing lender?

Alternatively I could buy down the rate with my broker as well, but if I can get .11% off for free, is it worth it? Between principal and interest difference at .11%, I come up with a savings of $41 a month. About 15K over the life of the loan.

I almost am starting to think it's worth eating the cost to make sure the deal gets done. I would make 24% return on my money per year not counting appreciation so I don't want to risk losing the deal with a lender that may fail. My broker can close like nobody's business.

[Another Reader]

Missed this, but that's the kind of question only you can answer.  If "getting the deal done" means you get the property and a delay might mean you lose the deal, then I would be inclined to stick with the broker.  Otherwise, I would rather save the $46 a month, especially if my anticipated holding period was long.