With rates at record lows, we often get calls from borrowers currently locked and working with another loan officer. They might say, “I am locked at 3.75% but I want to see if you can do better.” We invariably can offer a much better rate, but unless the borrower is getting a decidedly bad loan, we usually suggest that they stick with their current lender.
The reason is two-fold. First, rates may have been a tad higher when the borrower locked. And it is not fault of the borrower’s loan officer that rates fell further after the lock. That loan officer and lender incurred fees in good faith to lock that loan, and if rates had gone up, you can bet that borrower would be demanding that the lock be honored. We will suggest that the borrower ask about a “rate roll-down”, but we usually do not attempt to take the loan away.
And second, garnering a formal loan approval is an enormous amount of work. Shopping for rates, negotiating with borrowers, opening escrow, culling through reams of bank statements and tax returns, witting explanation letters, getting exact fees and preparing disclosures, preparing an enormous file for formal submission, arguing with underwriters, chasing conditions, and preparing document requests takes a tremendous amount of time. Most borrowers are unaware of this and think too little about just bouncing from one lender to another.
We more often than not simply listen to a borrower tell us about the terms of his loan, and then let him know that he is in fact getting a fair deal. We are happy to serve that role. And in those cases, when we believe a borrower is not getting a fair deal, we will happily help that borrower get a much, much better loan.
We address the above topic often, and we apologize if it is redundant. But the issue surfaces frequently in this type of rate environment.
Founder/Broker | JVM Lending
(925) 855-4491 | DRE# 01524255, NMLS# 335646