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Which Lender Should I Go With, if Either?

I'm buying my first home and got approved for a $200K mortgage from Chase for 30 years fixed at 5.375%.  Of course, since then the rates have been going down, down, down.  My lock with Chase expires on January 22nd. My Chase loan officer, knowing that I was looking for a lower rates, suggested that I look into my Teacher's Credit Union, which I did.  I was approved with them for a 30 year fixed at 4.875%.  My lock with them expires on February 4th. My contract called for closing on or about December 22nd, but my attorney assured me that the Sellers are fine with waiting until on or about January 22nd because of the Holidays and since I will have paid my January rent and wanted to close at the end of a month. My Chase loan officer said that if I let the lock period expire, then I will get the "rate of the day" when I close (which would be good for me if it is 4.5%). Chase has told me they are ready to close any time I am.The Credit Union said a commitment letter will be ready this week. So, here's my question: What does a mortgage commitment letter mean?  If I accept one from either Chase or the Credit Union, am I obligated to take a loan from them?Can my attorney order the title insurance without a commitment letter? If you were me and wanted the best rate and wanted to close in January, what would you do with the knowledge that the rate will probably go down after 1/13? Thanks for your help with this lengthy post :)
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January 04 2009 - Long Island City
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Answers (7)

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Since you have a lengthy post, I hope you won't mind a lengthy answer.....

You are never obligated to close your loan with a lender with which you apply for a loan. You might choose to apply with two different lenders and let them slug it out for your business, but that is not always the best solution.

The first question you have to ask yourself is " what do I want ? " Am I looking for the lowest possible rate, am I looking for the lowest possible fees, or am I seeking to deal with someone who is also looking out for my interests ? If your Chase LO suggested that you contact the credit union to find out about possible lower rates, then he ( or she ) may have been someone who was looking out for your best interests.

Rates are important, but not the only issue when selecting a lender to assist you with your purchase or refinance. Look at the fees, and the overall ease of dealing with the company as well. If the fees are high for a low rate, then maybe it is not a good deal. If the rate is higher but the fees are lower, can you still save money? There are no right or wrong answers, you have to look at your individual situation to determine what is best for you. Believe it or not, a good lender will help walk you through the different options and present you with different solutions based on your needs.

So here's the short and quick answer for your question....pick the rate you can live with, and go for your deal. Just like buying stocks, one never knows when the lows have been reach until after it has happened. And if rates don't come back to where they are today, will you kick yourself for having missed this opportunity ?

Good luck

Bob
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January 04 2009
flip a coin, it wont really matter in 100 years....
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January 05 2009
When a rate lock expires with a lender, you don't get market rates.  Instead, you, as Chris mentioned, get the worst case pricing under you are out of their system for about 45 days.
If you want the lowest rate, I suggest you follow through with the rate lock at your credit union and not wait for a magical rate reduction because it just might not happen and you will lose that rate lock too.
Be happy with 4.875.  It is a very good rate and you can't get that rate if you tried today with zero points.
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January 05 2009
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Don't assume rates will be lower later this month, either.

Tom O
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January 04 2009
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Thanks, Chris.  To think that the Chase Loan Officer was the one that told me that I would get the rate of the day.... how could he be so wrong?! 
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January 04 2009
When a rate lock expires you don't get the "rate of the day." You get worst case pricing. Whatever rate is higher, the original rate that was locked or the interest rate of that day, ONLY if it is higher then the original lock.  Banks are not going to reward people for missing a rate lock. If this was the case people would automatically let rate locks expire anytime current rates were lower. It wouldnt make any sense for the banks.
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January 04 2009
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I had considered using Chase at one point, but their fees seemed quite high in comparison to other lenders. I don't know if that is typical of them or not, but it maybe something to consider in choosing a lender along with their customer service and rates.
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January 04 2009
 
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