Breaking a mortgage rate lock

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RL1013
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Breaking a mortgage rate lock

Post by RL1013 » Tue Aug 13, 2019 6:14 pm

Looking for refinancing my mortgage and talked to 7 lenders so far. Locked rates with one of them yesterday. Today another lender provided an estimate that was significantly cheaper in origination fee (discount points). Is there a problem with withdrawing application from first and going with the second? Is it unethically or something to withdraw after locking in rates.
Last edited by RL1013 on Tue Aug 13, 2019 7:12 pm, edited 1 time in total.

megabad
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Re: Breaking a mortgage lock

Post by megabad » Tue Aug 13, 2019 6:22 pm

RL1013 wrote:
Tue Aug 13, 2019 6:14 pm
Looking for refinancing my mortgage and talked to 7 lenders so far. Locked rates with one of them yesterday. Today another lender provided an estimate that was significantly cheaper in origination fee (discount points). Is there a problem with withdrawing application from first and going with the second? Is it unethically or something to withdraw after locking in rates.
It is sometimes typical to have agreed to pay either an application fee or rate lock fee at this stage but all lenders are different. Not unethical at all but you might or might not owe some fees.

LoveTheBogle
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Re: Breaking a mortgage lock

Post by LoveTheBogle » Tue Aug 13, 2019 6:23 pm

Nope, it happens all of the time. Still, please be respectful of the time, energy and efforts of those in whom you conduct business. It would also be wise to atleast give the original company that you worked with a shot to secure your business rather than going dark on them. At the end of the day, I assume you locked with the original company because they impressed you the most. Don't support a different company if they are only marginally better in price because you may pay much more in stress later by going with the cheapest.

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ResearchMed
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Re: Breaking a mortgage lock

Post by ResearchMed » Tue Aug 13, 2019 6:23 pm

RL1013 wrote:
Tue Aug 13, 2019 6:14 pm
Looking for refinancing my mortgage and talked to 7 lenders so far. Locked rates with one of them yesterday. Today another lender provided an estimate that was significantly cheaper in origination fee (discount points). Is there a problem with withdrawing application from first and going with the second? Is it unethically or something to withdraw after locking in rates.
We've applied to two lenders most of the time (including both purchase and refi). For the purchase, it started b/c we had an unusual situation and we couldn't risk having the banker get hit by the proverbial bus.
It turned out that the lenders started bidding each other down (1/4 % less... lower closing costs... etc.), and we never expected that.
We did, no surprise, lose our application and appraisal fees from the lender we didn't choose. But we knew we'd lose one of them.

One time, a lender told us, "If you can really get that rate from the other lender, I'd suggest you grab it FAST!".
So we did :happy

RM
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Topic Author
RL1013
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Re: Breaking a mortgage lock

Post by RL1013 » Tue Aug 13, 2019 6:40 pm

The reason why I asked was because the first lender called me and talked in a very frustrated manner. I didn't even tell him that I was pulling out my application. I just send him the better loan estimate and asked if he could match or beat that. He told me that I was kind of screwing him by pulling out my application after the rate lock. He talked about how I wasted his time etc. My intention was to get best rate for my family. Not to cause pain or loss to someone. Felt bad after his venting. I was kind of wondering if it was unethical to do so.

And no, I didn't pay any appraisal fees or application fees.

LoveTheBogle
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Re: Breaking a mortgage lock

Post by LoveTheBogle » Tue Aug 13, 2019 6:53 pm

RL1013 wrote:
Tue Aug 13, 2019 6:40 pm
The reason why I asked was because the first lender called me and talked in a very frustrated manner. I didn't even tell him that I was pulling out my application. I just send him the better loan estimate and asked if he could match or beat that. He told me that I was kind of screwing him by pulling out my application after the rate lock. He talked about how I wasted his time etc. My intention was to get best rate for my family. Not to cause pain or loss to someone. Felt bad after his venting. I was kind of wondering if it was unethical to do so.

And no, I didn't pay any appraisal fees or application fees.
Run away from that lender and loan officer. Totally unprofessional.

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ResearchMed
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Re: Breaking a mortgage lock

Post by ResearchMed » Tue Aug 13, 2019 6:54 pm

RL1013 wrote:
Tue Aug 13, 2019 6:40 pm
The reason why I asked was because the first lender called me and talked in a very frustrated manner. I didn't even tell him that I was pulling out my application. I just send him the better loan estimate and asked if he could match or beat that. He told me that I was kind of screwing him by pulling out my application after the rate lock. He talked about how I wasted his time etc. My intention was to get best rate for my family. Not to cause pain or loss to someone. Felt bad after his venting. I was kind of wondering if it was unethical to do so.

And no, I didn't pay any appraisal fees or application fees.
If you hadn't paid any application or appraisal fees, then how much work did this mortgage agent actually do at this stage?

RM
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thx1138
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Re: Breaking a mortgage lock

Post by thx1138 » Tue Aug 13, 2019 7:00 pm

RL1013 wrote:
Tue Aug 13, 2019 6:40 pm
The reason why I asked was because the first lender called me and talked in a very frustrated manner. I didn't even tell him that I was pulling out my application. I just send him the better loan estimate and asked if he could match or beat that. He told me that I was kind of screwing him by pulling out my application after the rate lock. He talked about how I wasted his time etc. My intention was to get best rate for my family. Not to cause pain or loss to someone. Felt bad after his venting. I was kind of wondering if it was unethical to do so.

And no, I didn't pay any appraisal fees or application fees.
I wouldn’t continue to work with someone that tried to make me feel bad or guilty.

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ResearchMed
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Re: Breaking a mortgage lock

Post by ResearchMed » Tue Aug 13, 2019 7:12 pm

thx1138 wrote:
Tue Aug 13, 2019 7:00 pm
RL1013 wrote:
Tue Aug 13, 2019 6:40 pm
The reason why I asked was because the first lender called me and talked in a very frustrated manner. I didn't even tell him that I was pulling out my application. I just send him the better loan estimate and asked if he could match or beat that. He told me that I was kind of screwing him by pulling out my application after the rate lock. He talked about how I wasted his time etc. My intention was to get best rate for my family. Not to cause pain or loss to someone. Felt bad after his venting. I was kind of wondering if it was unethical to do so.

And no, I didn't pay any appraisal fees or application fees.
I wouldn’t continue to work with someone that tried to make me feel bad or guilty.
Right.

I'd expect, as with any professional who is being considered for some sort of position/etc., something like either a counter offer (as we've had sometimes, but not always) OR something like, "I'm sorry we weren't able to work something out. I wish you well in your new house." MAYBE including, 'Perhaps we'll be able to work with you in the future," IF they didn't feel misled, etc. If he did, then keep it to himself, and just don't work with them in the future, on the off chance that they apply again....

And even if it's only for selfish reasons, so they don't badmouth you to friends who are considering a mortgage...
We've given great recommendations to others about all of the lenders we worked with. They were all excellent in terms of how they handled things, though we did mention the ones that "beat the others". But there is no guarantee that would happen next time, or for a borrower with different finances/etc.

RM
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galawdawg
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Re: Breaking a mortgage lock

Post by galawdawg » Tue Aug 13, 2019 7:39 pm

thx1138 wrote:
Tue Aug 13, 2019 7:00 pm
RL1013 wrote:
Tue Aug 13, 2019 6:40 pm
The reason why I asked was because the first lender called me and talked in a very frustrated manner. I didn't even tell him that I was pulling out my application. I just send him the better loan estimate and asked if he could match or beat that. He told me that I was kind of screwing him by pulling out my application after the rate lock. He talked about how I wasted his time etc. My intention was to get best rate for my family. Not to cause pain or loss to someone. Felt bad after his venting. I was kind of wondering if it was unethical to do so.

And no, I didn't pay any appraisal fees or application fees.
I wouldn’t continue to work with someone that tried to make me feel bad or guilty.
Nor someone who had such an unprofessional and discourteous response to a very reasonable inquiry from a client/potential client. As mentioned, a professional response would be something along the lines of "I'm sorry, I wish I could, but we can't match that rate currently." Then if the lender thinks there are other reasons you should stick with them despite a lower rate elsewhere, he could spell them out, such as: "we have the highest JD Power satisfaction rating among consumers", "we guarantee your loan will close on time or...", "we'll come to you to close the loan at a place and time convenient for you", etc. and work to earn your continued business based upon factors other than lowest rate.

I'd walk away from that lender just based upon him saying that you are "screwing him" and that you "wasted his time". Not someone I'd want handling any of my business, much less something as important as a home loan.

Topic Author
RL1013
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Re: Breaking a mortgage rate lock

Post by RL1013 » Tue Aug 13, 2019 8:00 pm

Thanks for your thoughtful words. We sent him a mail saying we are withdrawing. He responded back saying he is disappointed and guaranteeing that loan is in underwriting and will close in 2 weeks. I am not going to respond.

He came across as a nice person who was clear with his initial communication and prompt in response. But the last exchange, I couldn't continue doing business with him. I wished him best of luck and moved on.

But I am still curious how my decision could have screwed him. Could it be a matter of conversion targets that his company set for him? Who knows!

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galawdawg
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Re: Breaking a mortgage rate lock

Post by galawdawg » Tue Aug 13, 2019 8:08 pm

RL1013 wrote:
Tue Aug 13, 2019 8:00 pm
But I am still curious how my decision could have screwed him. Could it be a matter of conversion targets that his company set for him? Who knows!
Just speculation but he may be compensated in part by commission, sometimes as much as 1% of the loan amount. Or he could be compensated in part based upon meeting certain performance/closed loan criteria.

JoeJohnson
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Re: Breaking a mortgage rate lock

Post by JoeJohnson » Tue Aug 13, 2019 8:09 pm

RL1013 wrote:
Tue Aug 13, 2019 8:00 pm
Thanks for your thoughtful words. We sent him a mail saying we are withdrawing. He responded back saying he is disappointed and guaranteeing that loan is in underwriting and will close in 2 weeks. I am not going to respond.

He came across as a nice person who was clear with his initial communication and prompt in response. But the last exchange, I couldn't continue doing business with him. I wished him best of luck and moved on.

But I am still curious how my decision could have screwed him. Could it be a matter of conversion targets that his company set for him? Who knows!
My lender said that locking costs the bank some money. Whether that's true or not is outside my area of expertise.

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ResearchMed
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Re: Breaking a mortgage rate lock

Post by ResearchMed » Tue Aug 13, 2019 8:15 pm

JoeJohnson wrote:
Tue Aug 13, 2019 8:09 pm
RL1013 wrote:
Tue Aug 13, 2019 8:00 pm
Thanks for your thoughtful words. We sent him a mail saying we are withdrawing. He responded back saying he is disappointed and guaranteeing that loan is in underwriting and will close in 2 weeks. I am not going to respond.

He came across as a nice person who was clear with his initial communication and prompt in response. But the last exchange, I couldn't continue doing business with him. I wished him best of luck and moved on.

But I am still curious how my decision could have screwed him. Could it be a matter of conversion targets that his company set for him? Who knows!
My lender said that locking costs the bank some money. Whether that's true or not is outside my area of expertise.
I'm pretty sure that whenever we locked a rate, we had at least some money at risk, meaning if we walked, we lost it. But it was never very much, and if we found a better rate, then over time, that would be far better financially.
(What we've sometimes done is lock at one lender and not at another, and then... if rates changed much, depending upon direction, we probably knew which lender to close with!)

But if this lender didn't require any application fee or such, well, that's how they chose to do business. Their choice.

RM
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Topic Author
RL1013
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Re: Breaking a mortgage rate lock

Post by RL1013 » Tue Aug 13, 2019 9:10 pm

galawdawg wrote:
Tue Aug 13, 2019 8:08 pm
RL1013 wrote:
Tue Aug 13, 2019 8:00 pm
But I am still curious how my decision could have screwed him. Could it be a matter of conversion targets that his company set for him? Who knows!
Just speculation but he may be compensated in part by commission, sometimes as much as 1% of the loan amount. Or he could be compensated in part based upon meeting certain performance/closed loan criteria.
yes, I think that might be the case.

seawolf21
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Re: Breaking a mortgage lock

Post by seawolf21 » Tue Aug 13, 2019 9:17 pm

RL1013 wrote:
Tue Aug 13, 2019 6:40 pm
The reason why I asked was because the first lender called me and talked in a very frustrated manner. I didn't even tell him that I was pulling out my application. I just send him the better loan estimate and asked if he could match or beat that. He told me that I was kind of screwing him by pulling out my application after the rate lock. He talked about how I wasted his time etc. My intention was to get best rate for my family. Not to cause pain or loss to someone. Felt bad after his venting. I was kind of wondering if it was unethical to do so.

And no, I didn't pay any appraisal fees or application fees.
Complete amateur. If this is reaction, what would the reaction be if a customer invokes the 3 day rescission after closing?

Topic Author
RL1013
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Re: Breaking a mortgage lock

Post by RL1013 » Wed Aug 14, 2019 9:17 am

seawolf21 wrote:
Tue Aug 13, 2019 9:17 pm
3 day rescission after closing.
Learned something new today. :)

LoveTheBogle
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Re: Breaking a mortgage lock

Post by LoveTheBogle » Wed Aug 14, 2019 1:33 pm

RL1013 wrote:
Wed Aug 14, 2019 9:17 am
seawolf21 wrote:
Tue Aug 13, 2019 9:17 pm
3 day rescission after closing.
Learned something new today. :)
You could always test it out and see and then post back here the results.

Just kidding, life is too short. Don't play games. :)

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