Changing Lenders After Locking Rates

Changing Lenders After Locking Rates During Mortgage Process

Gustan Cho Associates are mortgage brokers licensed in 48 states

This article addresses Changing Lenders After Locking Rates During Mortgage Process.

It is allowed to switch lenders even after locking in the rates, and borrowers are not obligated to pay fees or costs. For borrowers with credit scores exceeding 700 FICO, it is advisable to shop around for rates. Unfortunately, those with lower credit scores and less-than-perfect credit may face limitations. Such borrowers may need help to qualify with lenders who impose overlays, making loan approval from any lender a welcome opportunity.

The desire for the best possible mortgage rates often leads borrowers to initiate the mortgage process with the first lender they encounter.

However, the mortgage industry is highly competitive for borrowers with higher credit scores and income. Mortgage rates can vary significantly, prompting borrowers currently in the mortgage process to consider changing lenders after locking rates if they discover another lender offering substantially lower rates. This blog dives into the topic of changing lenders after locking rates and the process of restarting the mortgage application with a new lender.

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Can I lock rates with multiple lenders?

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While it is technically possible to lock rates with multiple lenders, it’s not a common or recommended practice. Doing so may lead to credit score impacts, increased costs due to potential fees, and timing challenges in decision-making. Lenders typically require a commitment when rates are locked, and fluctuations in the market can complicate the decision-making process.
Borrowers should shop around for rates before committing to a specific lender without simultaneously locking rates with multiple providers.

How To Avoid Changing Lenders After Locking Rates

One of the regrets many borrowers have after starting the mortgage process with a lender is the uncertainty if they got a good mortgage rate. One way to avoid Changing Lenders After Locking Rates is educating on the mortgage process. Talk to several lenders and see what they have to say. Take a hypothetical case scenario with loan officers what the mortgage rates are.

See what you need to do to get a better rate. There are quick fixes many loan officers can do to increase your credit scores. Just paying down your revolving credit card balances to a 10% credit utilization ratio can boost your scores substantially. Most direct lenders have a FICO Simulator to go over consumer credit score improvement. 

Comparative Shopping For Mortgage Rates And Terms

Mortgage rates differ from lender to lender. If you have high credit scores and are a prime borrower, it is highly recommended that you shop with several lenders before starting the mortgage process.

Main Reason For Changing Lenders After Locking Rates

Over 75% of our borrowers at Gustan Cho Associates are those Changing Lenders After Locking Rates and starting their mortgage process with us. Mortgage rates are not the only issue. Many borrowers get a last-minute mortgage denial or are stressing during their mortgage process because their loan officers have not properly qualified them.

Most loans take 30 days to close from submission to closing. If borrowers are encountering problems with their current lender and/or loan officers, changing lenders after locking rates may be an option to explore.

Other Changing Lenders After Locking Rates is because of unresponsive loan officers. It takes them hours and/or days to reply to an email, text, or return phone calls. Other reasons for Changing Lenders After Locking Rates is because their lender keeps on reconditioning the file after conditional loan approval. The mortgage process is a process.

Does It Cost Borrower Fees And Costs When Switching To A Different Lender?

Changing Lenders After Locking Rates

Borrowers should not be paying a dime with the exception of a home appraisal. If a lender asks for an upfront application fee and/or credit report fee, go to a different lender. Gustan Cho Associates does not charge and upfront fees including rapid rescore fees with the exception of home appraisals. Borrowers who paid an upfront credit report and/or application fees will not get reimbursed when changing lenders. 

What Happens With Home Appraisal When Switching To New Lender

FHA And VA Home Appraisals can be transferred from one lender to another. If a home buyer already paid for an FHA and/or VA appraisal, they can transfer it without ordering a new appraisal when switching lenders. On conventional loans, conventional appraisals cannot be transferred from one lender to another. There is no reimbursement on conventional appraisals by the exiting lender. Many times, the new lender may pay for a new appraisal without charging the borrower.

Locking Rates During Volatile Markets

Nobody has a crystal ball. Many loan officers speculate in locking mortgage rates thinking it will get lower. This practice never works. Rates go up and down. Sometimes rates change hourly. Once a rate is locked, you need to take that rate unless you switch lenders. Switching lenders just to avoid a mortgage rate lock is a risky move to take.

Rates can skyrocket by the time you are settled with the new lender. If rates have dropped significantly, talk to your current lender and see if you can get the lower rates. If they say no, tell them you are switching lenders.

Starting New Mortgage Process With New Lender

Changing lenders during the mortgage process is not difficult. However, the new lenders will need to issue new disclosures and Loan Estimate. All the files that you submitted to your first lender will need to be resubmitted to the new lender. FHA and VA appraisals can be reused and buyers do not have to order a new appraisal. The loan needs to relocked at the new lender. If it is an FHA Loan, the mortgage processor at the new company will requires an FHA Case Number Transfer.

Can You Change Rate After Locking?

In most cases, once you have locked in a mortgage rate with a lender, the rate is considered fixed for a specified period and cannot be changed. As a borrower, you can secure a specific interest rate for a set duration by entering into a contractual agreement with the lender, known as a rate lock. This agreement typically lasts for 15 to 60 days or more.

Whether market interest rates rise or fall during this lock period, your agreed-upon rate remains unchanged. This protects borrowers against potential rate increases while their loan application is processed.

However, there may be certain situations where a lender might allow changes to the locked rate, but this is typically not a common practice. If there are exceptional circumstances or a specific provision in your agreement that allows for adjustments, you should discuss this directly with your lender.

It’s essential to thoroughly go through and comprehend the terms of your rate lock agreement before moving forward. This will clarify the conditions under which a rate change may be permitted. Always communicate openly with your lender and seek clarification on any uncertainties to avoid misunderstandings.

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Can I switch mortgage lenders after locking rate?

Yes, it is generally possible to switch mortgage lenders after locking in a rate. Still, the feasibility and process depend on the terms and conditions set by the original lender and the specific circumstances of your mortgage application. While some lenders may allow you to switch without fees or penalties, others might have restrictions or associated costs.

Steps to Follow When Switching Lenders

If you’re considering changing lenders after locking in a rate, here are some steps to follow:

  1. Review Your Agreement: Examine your agreement or documentation with the original lender. Look for any clauses related to rate locks, changes, or fees associated with switching.
  2. Contact the Original Lender: Contact your current lender and inquire about their policy regarding changing lenders after a rate lock. Ask about any potential fees or conditions for doing so.
  3. Check the New Lender’s Terms: Contact the new lender you’re considering and discuss the possibility of transferring your mortgage application. Inquire about their rates, terms, and any associated costs.
  4. Compare Costs and Benefits: Evaluate switching lenders’ overall costs and benefits. Consider factors such as the potential savings on interest rates, any fees involved, and the stage of your mortgage application.
  5. Inform the Original Lender: If you decide to proceed with the switch, inform your original lender and follow any necessary procedures outlined in your agreement.
  6. Provide Documentation: Work with the new lender to provide any required documentation and complete the application process.

Please keep in mind that there is no guarantee that you can change lenders after locking in a rate. The process for doing so can also vary depending on your specific circumstances and your chosen lender’s policies. It’s crucial to communicate openly with the original and new lenders and carefully review any agreements or terms to ensure a smooth transition.

Can Lender Change Interest Rates After Closing?

Once a mortgage loan has successfully closed, the interest rate is typically considered final and cannot be changed by the lender. Closing signifies the completion of the transaction, and both the borrower and the lender are bound by the terms outlined in the closing documents. This includes the agreed-upon interest rate, which remains fixed for the duration of the loan.

Exceptions to this rule may arise in case of errors or mistakes in the loan documents, fraud or misrepresentation, or if both parties agree to a loan modification after closing. In the event of an error or fraud, the lender may take corrective action, possibly involving adjustments to the interest rate.

However, such circumstances are relatively rare, and borrowers should thoroughly review all loan documents during the closing process to ensure clarity and address any concerns before finalizing the transaction.

Will There Be Closing Delays When Changing Lenders

Borrowers thinking of changing lenders are often concerned about mortgage closing delays. The mortgage process depends on the individual lenders. We will discuss our mortgage process timeline at Gustan Cho Associates. If it is an FHA and/or VA Loan with a completed appraisal, we can normally close the loan in 7 to 10 business days. If we do not have an appraisal, it will take 14 to 21 business days.

Our policy at Gustan Cho Associates is they get priority and our support staff work late evenings, weekends, and holidays. For any questions on this topic matter, feel free to contact us at Gustan Cho Associates at 800-900-8569 or text us for a faster response. Or email us at The team at Gustan Cho Associates is available 7 days a week, evenings, weekends, and holidays.

Does Changing Lenders After Locking Rates Make Sense

Sometimes the mortgage process can be stressful. Some borrowers may want to take it out to their loan officer and threaten them they will be changing lenders after locking rates. However, borrowers need to consider is changing lenders the best option?  What is the main reason for switching lenders? 

If it is a serious matter like a mortgage underwriter nitpicking and reissuing conditions after conditions, then yes, it is a good idea to change lenders. Remember that the whole mortgage process needs to restart if you switch lenders.

FAQ: Changing Lenders After Locking Rates During Mortgage Process

1. Can I lock rates with multiple lenders? While technically possible, it’s not recommended. Multiple rate locks can impact your credit score, incur fees, and complicate decision-making due to market fluctuations.

2. How To Avoid Changing Lenders After Locking Rates? Educate yourself on the mortgage process, discuss hypothetical scenarios with loan officers, and explore options for improving credit scores before committing to a specific lender.

3. Is Comparative Shopping For Mortgage Rates And Terms Advisable? Yes, borrowers with good credit should consider approaching multiple lenders to find the most favorable interest rates and conditions before initiating the home loan application process.

4. What are the Main Reasons for Changing Lenders After Locking Rates? Borrowers may opt to change lenders due to last-minute mortgage denials, unresponsive loan officers, excessive reconditioning of loan files, or other issues encountered during the mortgage process.

5. Do Borrowers Incur Fees and Costs When Switching to a Different Lender? Generally, borrowers should not incur additional fees except for the home appraisal. If a lender requests upfront application or credit report fees, seeking alternatives is advisable.

6. What Happens with Home Appraisal When Switching to a New Lender? FHA and VA appraisals can be transferred to a new lender, but conventional appraisals cannot. Borrowers may need to order a new appraisal for conventional loans, potentially at the expense of the new lender.

7. Is it Possible to Change the Rate After Locking? In most cases, locked mortgage rates are considered fixed for a specified period and cannot be changed. Exceptions may exist depending on the lender’s policies and any specific provisions in the agreement.

8. Can I Switch Mortgage Lenders After Locking the Rate? Yes, it’s generally possible, but the feasibility and process depend on the terms set by the original lender and individual circumstances. Communication with both lenders is essential to facilitate a smooth transition.

9. Will There Be Closing Delays When Changing Lenders? Closing delays may occur depending on individual lenders and the mortgage process stage. Borrowers should discuss timelines and potential delays with both the original and new lenders.

10. Does Changing Lenders After Locking Rates Make Sense? It depends on the specific circumstances. While changing lenders may alleviate certain issues, borrowers should carefully weigh the benefits and drawbacks before making a decision.

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This blog about Changing Lenders After Locking Rates During Mortgage Process was updated on March 12, 2024.


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