Mechanics of shopping for a mortgage

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CalculatedRisk
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Joined: Tue Sep 11, 2018 8:04 pm

Mechanics of shopping for a mortgage

Post by CalculatedRisk »

I'm purchasing a new construction home, which we expect to be ready in the next several months. In view of that, I have some time to figure out mortgage details. I have some questions on the actual mechanics of shopping for a mortgage. While I don't think it is relevant, it will likely be a 20% down jumbo loan and I can move $1M+ in assets for a relationship discount.

Assume I get credit checks from multiple banks. Bank 1 provides me with a Loan Estimate ("LE") on Sep 20 for 2.75%. Six days later, bank 2 provides me with a LE on Sep 26 for 3%. (These are all made up rates)

1. Will banks typically accept a LE that is several days old for price match purposes? E.g., On Sept 30, will Bank 1 match/beat the Bank 2 rate based on the Sep 26 LE? If not, what is the best way to handle getting estimates and shopping them around?
2. Do I need to lock in a rate with one bank in order to have another bank match that rate?
3. Can I lock in a rate with bank 1, then continue shopping around with other banks and use the Bank 1 locked-in rate as a fallback position? Any downsides to this?
4. Are there any banks that will provide a 120-day rate lock if the address is known, but the closing date is not set (but expect to be within the 120 days)? If so, what happens if the closing doesn't happen within the 120 days?
5. Can I lock in rates with two different banks and potentially even proceed through part of the process with both, then last minute pick a bank to close with? For example, can I get a rate lock 60 days in advance of closing, then if rates drop 30 days later, switch to a different bank (assuming there is enough time to close)?
Golf maniac
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Joined: Wed Dec 27, 2017 2:02 pm
Location: Florida

Re: Mechanics of shopping for a mortgage

Post by Golf maniac »

You are making this too complicated. You can shop rates and closing costs without having your credit pulled. The tough part for you will be the closing date since it is a new construction. You need that to be nailed down. If you miss the closing date you pay a fee, if it is the builders fault you can try to collect from them. Within 45 days or so start shopping. You can check with the large banks (think Wells, BofA, Chase, etc). Check local banks and a broker. Check with the home builder who may have a deal for a better rate or closing costs. You can play one lender off the other to try and get a lower rate or lower closing costs. It doesn’t matter if the estimate is a few days old unless rates have increased dramatically if those few days. Do not lock until you find the best deal. Read reviews about the lender and make sure they don’t have issues closing on time.
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CalculatedRisk
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Re: Mechanics of shopping for a mortgage

Post by CalculatedRisk »

Golf maniac wrote: Mon Sep 13, 2021 6:08 pm You are making this too complicated. You can shop rates and closing costs without having your credit pulled. The tough part for you will be the closing date since it is a new construction. You need that to be nailed down. If you miss the closing date you pay a fee, if it is the builders fault you can try to collect from them. Within 45 days or so start shopping. You can check with the large banks (think Wells, BofA, Chase, etc). Check local banks and a broker. Check with the home builder who may have a deal for a better rate or closing costs. You can play one lender off the other to try and get a lower rate or lower closing costs. It doesn’t matter if the estimate is a few days old unless rates have increased dramatically if those few days. Do not lock until you find the best deal. Read reviews about the lender and make sure they don’t have issues closing on time.
Why not lock with one bank with reasonable rates to have as a backup, then work with another to try to get a better rate?
Golf maniac
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Joined: Wed Dec 27, 2017 2:02 pm
Location: Florida

Re: Mechanics of shopping for a mortgage

Post by Golf maniac »

Many times a bank will charge a fee for locking and apply it to closing costs.
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