If you don’t like the relationship with your lender, you have the right to switch your lender before you close on the loan. However, when you switch, some consequences come with it which include delayed closing, higher costs, and another credit check.
Never settle for a lender that stresses your mental health as the process will be unbearable for you. Here are the things you should know if you’re considering changing your mortgage lender before closing:
Can You Switch Mortgage Companies?
As the borrower, nothing stops you from switching your mortgage lender before closing a loan. Before you choose a mortgage lender, you must ensure you’ve done your research and know their rates ahead of closing. Most times, despite doing your research, you might still be unlucky to work with a mortgage lender you don’t like. Below are reasons why you should consider switching your mortgage lender before closing:
- Delays to the closing date can affect you and the seller
- Poor customer service and disorganization
- Unexpected changes to loan fees, terms, or conditions.
- Requirements that are more than the normal qualification guidelines for a loan – this is called an overlay.
What to Consider Before You Switch to a Different Lender
Before you consider switching your mortgage lender, here are a few things you should consider that can make you stick with your current lender.
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Closing Delays
Switching to a different lender could delay your closing timeline which can affect your deal. And in the worst-case scenario, it could lead to a failed sale. In this case, the seller may not refund you because you were the one who broke the agreement. Before you switch lenders, ensure you ask your lender whether it can meet your deadline for closing.
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New Credit Check
You’ll need to redo the process of submitting an application and getting another credit check from another lender. If you’re still in the early process, an extra hard inquiry may affect your credit score. And if your credit score has reduced since you applied for your current loan, it could affect your ability to work with your new lender.
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Potentially Higher Interest Rate
If you’re switching because of a reduction in interest rate, you don’t have to worry about this. Before you switch lenders due to high-interest rates, you can ask your lender to know if they’re willing to reduce their rate or give you a better rate option.
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Repeated Costs
You may need to repeat some costs that you’ve paid if you’re going to switch lenders. For instance, appraisals cannot be transferred from one lender to the other. Also, you’ll have to repeat payment of credit report fees. These repeated fees can affect your budget.
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Added Stress
The process of buying a home can be stressful and challenging so switching lenders can add to your stress level. Before deciding to switch lenders, you must ensure it’ll be worth it.
Conclusion
The process of switching to a mortgage lender is just the same as when you chose your first one. Once you find the right lender, you’ll lock in a rate and start the underwriting process. However, it’s alright to stick with your current lender if you can’t find other favorable options.
Also, ensure to keep your real estate agent and the seller informed on your choice to switch mortgage lenders so that they can fix a new date for closing if necessary.
If you’re looking for the best mortgage lenders in Chattanooga with the best rate, you can count on us at HomeRate Mortgage. At HomeRate Mortgage, we have a wide range of mortgage products to choose from. Our experienced team of loan officers will help you find the best FHA Loans for your needs.
Contact us today to learn more about our services!
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