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Should I switch lender for my refinance if I find a better rate/closing costs than my lock?

It's been 2 months since my lock. The lender's been dragging their feet. My appraisal came back much higher than the amount being asked for refinance. I get no update from the the current lender, but meanwhile I find another lender with better rate and closing costs. Am I allowed to cancel the current refinance process and switch to another lender? Will my appraisal be transferrable to the new refinance process so that I don't lose the money I spent on it?
  • August 31 2012 - Pacifica
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Answers (4)

Hello Stephanie,

Chances are you are probably refinancing with a National Lender whose turn times are around 60-90 days. Don't be surprised if you find other lenders like Mortgage Banks (Land Home Financial, RPM, Guild) offering slightly better rates and faster turn times.

With that said, to answer your question:

-you can cancel anytime, you may lose your application/appraisal fee (no worry)
- It's very likely most lenders will not allow you to use your current appraisal if you switch however, there's no reason why we can't give you a credit for it.

I know you have been patiently waiting to close and move on with the rest of your summer but If rates are better and you can save money up front, I would make a switch and work with someone that appreciates your business. Those extra $20-$30 difference in monthly savings add up over the life of the loan. When will you be able to take advantage of 3.5% 30 yr fixed rates again?

Best of luck,

Ivan Diaz
Home Mortgage Consultant
[Contact information removed by Zillow moderator. Please see our Good Neighbor Policy.]
  • August 31 2012
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Ivan is right on the "money" regarding the appraisal credit, and your never committed to a refi until you sign the closing docs. If you've found a better deal and this current bank is screwing around, I think it would be a great thing for you to "fire" your current bank and go with someone else.

Many lenders have been getting away with murder lately, routinely failing to meet timelines and commitments. What a great message you'll send to one that has apparently done the same to you, when they loose your business.

One word of caution. My recommendation based on the last couple years of watching these guys is, use a lender with a local office. I've found that some lenders that have great rates are located out of state, and those often seem to be the same banks that are dragging their feet on these loans. If they have no local office, you're at the mercy of their willingness to answer the telephone (and many, especially those that play these games, choose not to, as hard to believe as that is). In my opinion, it's always best to use a lender that has a local office, so that you can go into their office and stand on someones desk until they take care of whatever issue they should be taking care of. Just my preference, as someone who deals with lenders frequently.

Hope this helps:)
  • August 31 2012
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If your appraisal was HVCC compliant then there are some lenders who will accept a transfer. It depends partly on who the appraisal management company(AMC). Many lenders use the same AMC's and they will take a transfer if it is from one they are already doing business with. The tricky part is it must be sent to the new lender Directly from the existing lender and that might be tough in a case where you are withdrawing an application as opposed to a decline. Lastly I'm assuming you are doing a Fannie Mae or Freddie Mac loan as opposed to FHA or VA. If FHA or VA the appraisals are easily transferrable.
  • August 31 2012
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Thank you all so much for the advice and information on lender differences and appraisal processes. I have to evaluate whether or not it's worth pursuing a new lender given what I've spent already. It's always good to stay informed and know what my options are.
  • August 31 2012
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