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Can I switch lenders after application started???

So now have found a house that we have put an offer in on and negotiated and everything. Went thru the inspections and appraisal. Currently submitted our application through 5/3 because that was who our realtor recommended. We were looking at Sibcy Cline Mortgage along with Superior mortgage services. We are doing an FHA loan with 3.5% down. Rates locked in a 4.125%. We could have gotten 4 but they offered a reduction in closing costs if we did the .125% higher along with autopay for our monthly payments. Sale amount is 168K but we got the sellers to pay for 2k towards closing costs. With the reduction that the bank offered it put the closing costs around $1700. We also got 1.125 points. Even though Im still not sure how they work?

We close on March 14th. Still over a month away.We have "conditional approval" through 5/3 now but have 1 more document to submit before we get final approval. 

Well the reason we are looking to switch is because we have heard horror stories about 5/3 and their mortgages from friends and families. Im sure every bank has some horror stories but just dont feel comfortable right now with 5/3. Im not sure if its too late to even consider switching at this point. We are first time home buyers and not too familiar with the whole process. If we were able to switch would we be out any money? Im assuming the application fee of $200 plus the appraisal of $400. But is there anything else? And would that effect our FHA loan process?

Any help would be great! Just at a lost of what to do. 
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February 10 - Cincinnati
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Best Answer
Are you getting the best deal anyone has ever gotten? No. Are you getting a fair deal? Yes. If you are comfortable with your Loan Officer, don't listen to the negativity. Every company has had horror stories. There are plenty of third party issues that could have caused your friends and family's issues. The bank/lender will always get blamed though, it's the nature of the business. 

On the other hand, if you're not comfortable anymore, you should look around. FHA appraisals are transferable, so you wouldn't have to pay for a new one. Your new lender would get the case number assigned to them. Keep in mind, there is no guarantee your new lender will be any better than 5/3.

Take "deals" being offered with a grain of salt. Example: I can offer $0 in closing costs. Your rate wouldn't be as good as if you paid my normal closing costs though. Additionally, if you are escrowing, a year of homeowner's insurance plus a buffer of that and taxes will be collected. Maybe 5/3 is including those and the new place is not? Many different factors to consider before jumping ship.
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February 11
You can change lenders at any time, but keep your closing date in mind. If your closing date is March 14th, you still have time to change. Your appraisal would be transferred over to your new lender so you would not be out your appraisal fee. If you paid an application fee, you would most likely be out the $200. Every lender has horror stories, but I have not heard anything bad about Fifth Third. Inbox my profile if you have any other questions. Thanks!
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February 13
Profile picture for shapiroamg
Take the Title Insurance. Three owners of the house but before there was a house there was land. Which was owned by a chain of people and subdivided over time.  Its a small amount for a lot of protection.

One more word about 5/3.  They are a large regional bank that does a huge volume of loans. Not every loan will go smoothly and when people complain, its what others hear.
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February 12
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Andy, Im not sure what you mean by "excess seller contribution". The owner's title insurance we would be paying for as we didn't ask for this from the sellers. Looking back on things I might have considered it now. I have read it is usually paid for by the sellers and then the lenders title insurance is typically paid for by the buyers.
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February 12
Two comments about the title insurance - firstly it usually covers future events so that it's not simply a question of the lender doing a quick search themselves of past transactions. More importantly, it seems as though you already have an "excess seller contribution" issue - why would you try to further reduce costs that the seller is willing to pay for?   
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February 11
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Norm, you are correct. Our realtor recommended a loan officer and not necessarily a bank itself. Just happens she works for that bank. She has been fine and has treated us fairly. We will stick with them and follow through. As mentioned by everyone, no reason to switch just because of "horror stories".

Still debating about the title insurance though. I know the lender's is required but the owner's is not. The house is 19 years old and we will be the 3rd owners of it. I have done my own research on the county recorders website among other places. Havent seen anything stand out and everything looks good. Makes me wonder if the lender does the search for themselves aren't they going to have things corrected before they lend us the money for a house? Just don't want to be in the "penny wise pound foolish" category. But also don't want to pay for unecessary things if I can help it. Any  thoughts?
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February 11
Hello user4025023,


Fifth Third is a fine place to get a loan.  They've got you ready to close about a month early, submit your docs and enjoy your house. 

I am reminded of the fable of the man, the boy, and the donkey in this case.  Someone will always have plenty to say about what you're doing, you'll never make everyone happy.  If you switch from 5/3 to a different lender, inevitably someone will have horror stories about them too. 

Close your loan. Get your house.  Move on with your life. 

Hope this helps! 


Thanks,
Aaron

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February 11
Its unlikely your realtor recommended 5/3rd, its more likely your realtor recommended a specific loan officer who happens to work at 5/3.

If you're happy with the service provided by your loan officer, and you didn't mention otherwise in your post, then why would you switch?






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February 11

It tough not to listen to negative stories but if your loan is already conditionally approved and appraisal is done, you should stick with it.  It would be tough to start all over at this point and you raise the risk of not closing on time.   If they charged you an application fee you would loose that and they would charge you for the appraisal as well.   Good luck and congrats on your first home.

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February 11
The reputation of 5/3rd is exactly what you stated but, I can confirm they are able to close deals.  We have closed quite a few and the process went smoothly.  We have a great lender contact at 5/3rd which makes a big difference in how the how the transaction is handled.  
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February 11
Profile picture for user4025023

Thank you everyone for the advice. I do alot of research on things and the reviews for Fifth Third (our lender) are not the greatest. Mainly took them because our realtor recommended them and with us being first time home buyers didn't really know how the process worked. Your right though Enrique that there are pros and cons with every lender out there. One of the big cons though with sticking with our current lender going forward is that the closing costs are right around 1700. There is another local lender that is doing closing for 250 right now. They have great reviews and have been recommended by several friends and family. My dilema as you all have pointed out is the contract and closing date. Im not sure if that would be a problem though considering we still have over a month until we close. We are staying with family right now so no rush for us to move. The sellers actually wanted us to push the closing date out. We originally wanted the end of February. They asked for the middle of March. The earnst money was given over to our realtor to hold in escrow until we close. The only money we have given out to the actual lender so far is the application fee of 200. If we switched would we be responsible for the appraisal that has already been done? Also, would it hurt or what would be the downside to having another lender even see if they could beat the deal we have now with the current lender?

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February 11
You may run the risk in not closing within the time you expected if you make a change now or like Enrique said, you might just lose out on your earnest money. Take some time, like you already have, and consider the pros and cons of switching. Hope this helps.
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February 10
if nothing has gone wrong …..dont bother changing 
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February 10
Hello in Cincinnati!  Buying a home, especially for the first time, can be a roller coaster ride of concerns.  I"m sure you're reaching out on Zillow for more concrete answers and a solid recommendation of what you are able to do.  The reality is, if an FHA case number has been assigned to your loan.  Fifth Third would have to release that case number to another lender.  Don't feel trapped but rather just note this as a factor.  With any organization you will have individuals with both positive and negative experiences to share.   You should dig deeper if you want to switch at this point in the process and not make a decision without a concrete reason to.  You may jeapordize not closing in time or even getting out of contract on your Purchase Agreement or even sacrificing your earnest money.  These are all things you should consider in your decision.  If, at worst case, you can refinance in 12 months.  I hope this additional information as least helps out little.   
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February 10
 
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