Changing Mortgage Lenders During Mortgage Process

Gustan Cho Associates
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This BLOG On Changing Mortgage Lenders During Mortgage Process Was UPDATED And PUBLISHED On September 14th, 2020

Is Changing Mortgage Lenders During Mortgage Process A Good Idea?

You want to avoid changing lenders during mortgage process if at all possible.

  • Changing Lenders During Mortgage Process will cause delays in closing on your home loan
  • However, there are many borrowers who become unhappy with either the services of the mortgage loan originator or the policies of the mortgage underwriting process of their lender
  • They get fed up and want to change lenders
  • Changing mortgage companies during mortgage process is the only option

In this article, we will discuss and cover Changing Lenders During The  Mortgage Process.

How Can Changing Lenders During Mortgage Process Be Done?Changing Mortgage Lenders During Mortgage Process

Changing Lenders During The Mortgage Process can be done.

  • A percentage of my borrowers are borrowers who have decided that changing lenders during mortgage process is the only option
  • I often evaluate why the borrower wants to change lenders

Most borrowers who want to change lenders are borrowers who are not happy with the services of the mortgage loan officer.

Reasons Why Borrowers Want To Change Lenders During Loan Process

Mortgage loan officers not returning their phone calls is one of the biggest reasons why many borrowers change lenders during the mortgage approval process.

  • Other reasons why borrowers choose to change lenders is because the mortgage processor and/or mortgage underwriter keeps on asking for the same conditions over and over again
  • Or after the borrower turns in mortgage conditions and then the mortgage underwriter comes back with more conditions
  • However, changing lenders during mortgage process is a necessity when a mortgage underwriter issues a mortgage loan denial

This is because the borrower was not properly pre-approved by the mortgage loan officer in the first place.

Changing Lenders During Mortgage Process Due To Loan Denial

Unfortunately, not all mortgage loan officers are diligent in properly qualifying a home buyer prior to issuing a pre-approval letter.

The reason why borrowers get a last minute mortgage loan denial is due to the fact the loan originator failed to properly qualify borrowers.

Underwriter Mistakes

what Underwriter errors could be

Unfortunately, mortgage loan originators are human:

  • They can make mistakes
  • But all mortgage loan officers need to realize that they have a huge responsibility
  • This is because a lot of lives are at stake if they do not properly qualify a home buyer
  • Not only is the home buyer and their families affected, but also the home sellers
  • The home sellers often times are depending on the home buyer in closing on their home and they already may have another home under contract, have all of their belongings packed, have their children registered at the new school
  • Same with the home buyer
  • They probably already told their landlord that they are vacating their rental home
  • Many have signed up their children to their new school districts
  • Others have packed up their belongings
  • Many made plans to move by ordering new utilities
  • Many are giving final notices to their utility companies that they are vacating their rental apartment or home
  • As a loan officer, I make sure that every pre-approval letter that either one of my loan officers issue
  • Or I issue is rock solid and my mission is that 100% of all my pre-approval letter will close on time

That there will be no last minute hiccups where changing lenders during mortgage process is not necessary for any of my borrowers.

What Are The Steps In Changing Lenders During The Mortgage Process?

If you get a last-minute mortgage denial by your current lender and find another lender that can do your mortgage loan and get it approved and close, chances are that you will need an extension of your real estate purchase contract.

  • Most home sellers will understand that you will need more time if you are changing lenders during mortgage process
  • Normally, a 30-day extension to the real estate purchase contract is recommended

However, most lenders like myself will expedite the mortgage approval process for borrowers who are changing lenders during mortgage approval process.

Transferring Home Appraisals

FHA mortgage borrowers who had an FHA Appraisal done with a prior mortgage lender can get their FHA Home Appraisal transferred to the new mortgage lender so they do not have to pay for another FHA Appraisal.

  • The new lender will need to restart the mortgage application and approval process over
  • New Lender will need all the documents that you provided your old mortgage lender all over again
  • New credit needs to be pulled because we cannot transfer credit scores and cannot use the credit report used by the old lender
  • The mortgage loan file will be processed and submitted to underwriting
  • Once you get a conditional mortgage loan approval , you will need to get the conditions cleared and once the conditions are cleared, your mortgage loan file will get issued a cleared to close which means that the mortgage lender is ready to fund the mortgage loan
  • The closing department of your new mortgage company will arrange the mortgage loan closing with the title company

The title company will coordinate the closing date with both the buyers and sellers and/or the attorneys if real estate attorneys are used.

Changing Mortgage Lenders During Mortgage Process: How Often Does It Happen?

How Often Does It Happen?

I often recommend to borrowers who contact me about changing lenders during the mortgage process to stay with the current mortgage lender they are dealing with if at all possible. Unless the mortgage company is really stressing you out or due to no return calls or are constantly giving you more conditions after conditions or you get a mortgage loan denial, working with your current mortgage lender is always recommended. However, if you are getting the runaround and changing lenders during mortgage process is absolutely necessary, then please contact me at 262-716-8151 or text us for a faster response. Or email us at gcho@gustancho.com. Gustan Cho Associates is available 7 days a week, evenings, weekends, and holidays to take your phone call and answer any questions you may have.

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