There are many reasons to switch mortgage companies or lenders before your loan closes. You may switch at any time up to, and including, the end of the process, which is why the law requires a three-day right to cancel. A few of the reasons to change lenders include:
- Delays, delays, delays. This is the #1 reason borrowers start over with a new lender. Cut your losses if the lender you are working with is not timely.
- Lender changes the rate, loan conditions, or fees during the process. This is the #2 reason many borrowers find a new company to work with. Often brokers or loan officers bait-and-switch consumers once they are deep in the process, taking advantage of the relationship. Check the Better Business Bureau ratings or Rip Off Reports, and Google the lenders reputation to identify unethical companies from the start.
- Losing confidence in lender. The lender may be ethical, with genuinely nice people, but some offices are disorganized. What should take two or three weeks can end up taking two or three months. Look for signs of disorganization earlier than later and switch lenders early.
- Better Deal. Sometimes rates drop, credit eases, or another firm is willing to work harder for your business. Don’t be afraid to shop or consider other lenders. Even a small savings per month over 30 years can be a large amount of money.
If you have already paid for an appraisal or incurred small fees, your new lender will most likely reimburse you for those expenses.
Changing Loan Officer, Appraiser, Processor, or Escrow Before Closing
As a consumer, you have the prerogative to change lenders if you aren’t satisfied for whatever reason. If you’re unhappy with how your loan is being handled, don’t hesitate to ask that the account be given to a more experienced loan officer. You, too, as the consumer can ask for a change in any service provider such as appraiser, processor, title company, escrow, or notary related to your loan.
If you don’t go through with the loan, the loan officer will not earn a commission. That’s something to keep in mind while weighing your options. Remember the power is in your hands as the borrower. The bottom line is that you should be able to walk away from the closing table without any regrets, financial or otherwise.
It’s also noteworthy that if you’re applying for an FHA loan, you’ll need an official FHA case number. If you don’t know that number, don’t fret. Your new lender can request it from the old lender, or simply look it up.