Changing lenders 2 weeks before closing?

Question

I decided to go with my agent's "recommended" lender and didn't think anything of it as the numbers seemed within reason. I get an email about 1 week ago (3 weeks from closing) from a large bank asking if I needed a quote and I said yes the quote from the bank ended up being 5k cheaper in cash to close for nearly identical terms and P&I. I did this without informing my agent as I assumed it was just a quote well long story short he was very surprised and concerned and urged me to decide within 24 of who we will move forward with. He is concerned that they will not be able to close on time and I will lose my earnest money and be out of a great deal and also kicking the lender out of his commission. The large bank assures me they will be able to close on time as they are already very far along and can simply get the documents transferred. I am happy to supply numbers if that will clarify and allow for an easier decision.

Ben Firstenberg · Answer

Think I'm a little too late for this but just adding some detail from the agent's perspective. Part of the problem with switching lenders is the lender will require an appraisal and that takes at least a week to get done. So if you're starting over with a new lender with 2 weeks before closing it's a VERY tight window. Some lenders can close in 10-14 days but that's really fast in general. A lot of times it takes longer.

In general, agents represent you and your best interests above all else but they also don't want to jeopardize the transaction. During the contingency phase of a contract, all parties are trusting everyone else to do what they need to do to close the deal. Switching up lenders (or anything else) just introduces a lot of insecurity to the situation and can give the impression that you're unreliable. A deal falling through like that can also damage an agent's reputation. Some worry about that more than others.

Not at ALL to say that you did anything wrong. I think you were right to consider another option and your agent was right to be concerned. It's possible that asking you to decide in 24 hours was an overreaction, but I don't know the situation very well.

Hope that helps. Just wanted to explain a little bit of the behind the scenes for you.

Jason Wray · Answer

Simple ask for a purchase contract extension and close with the other bank saving you more money.  You need to get confirmation that the other bank/lender can do a "Rush" underwrite and meet the closing date.

Usually realtors refer their buyers to local loan officers that really do not save you any money.  There is a "myth" to so called local lenders being better.  The real truth is a Nationwide Fully Delegated FDIC Bank is the best choice.  They have No overlays, they underwrite all of their deals in house, do not broker out, and offer portfolio funding.  Not to mention they offer raw pricing and cannot charge points as an FDIC Banker.

Matt Barth · Answer

Your current lender might also be willing to match the other banks offer. It’s worth offering it to the current lender to see what they say. If the new offer is from a large and experienced bank and they are saying they can close in time and have a track record of closing, I would consider using them if the current lender wasn’t willing to come down in fees.

As Jason said, you can also ask for an extension. If the property didn’t have a ton of other offers on the table, I would assume the extension would get granted. Your agent should be able to provide some insights on that.

Changing lenders 2 weeks before closing?

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