How Far Into a Loan Would You Get Before Switching Lenders?

Question

Say you’ve already sent every document, paid for the appraisal, and spent a couple of weeks going back and forth. Then the lender changes the terms or underwrites the deal differently than you expected. Would you eat the appraisal fee and start over with someone else? I feel like once you’ve already put money and time into one lender, it gets really easy to keep going just because you’re already this far in. Where do you guys draw the line?

Robin Simon · Answer

The appraisal is owned by the borrower and you should always be able to take it to another lender if needed - you should not have to pay this twice (unless you are ordering a whole new appraisal)

Claudia Rodriguez · Answer

One thing that's helped clients avoid this exact spot: ask for a written conditional approval or term sheet before the appraisal gets ordered, not just a verbal quote. It should spell out rate, LTV, DSCR/ratio requirement (if applicable), and any conditions that could still move pricing. Once that's in hand, you have something concrete to hold the lender to. If the final terms deviate from that document without a real underwriting reason (property condition, occupancy, appraisal marking rural vs suburban like Stacy mentioned, etc.), that's the signal to switch, not a gut feeling. If they deviate because something legitimate turned up, at least you know it wasn't just a bait-and-switch. Won't get the appraisal fee back after the fact, but it means you're deciding based on what actually changed instead of trying to remember what you were originally quoted.

Jesus Suarez · Answer

Hey from a fellow Houstonian! Always great seeing someone from H-Town on the forums.

Don't fall into the sunk cost fallacy. If a lender pulls a last-minute bait-and-switch that ruins your numbers, walk away. The good news is that the appraisal belongs to you, not the lender. As long as it was ordered through a licensed AMC, you can almost always transfer it to a new lender with a simple assignment letter. You likely won't have to eat that cost or pay for a second one.

I draw the line at major structural changes—like requiring way more cash down or hiking your rate. If the deal doesn't make sense anymore, transfer your appraisal and move to a lender who honors their word!

Ray Williams · Answer

Ali, the sunk cost angle everyone mentioned is right, but the piece nobody brought up yet is that a lender legally cannot just change your numbers without a documented reason once you have a Loan Estimate in hand. Under TRID rules there is a defined list of valid changed circumstances that allow fees or terms to move: a different appraised value that shifts your LTV or DSCR ratio, a credit re-pull that shows new debt or a lower score than at application, updated income or asset documentation that does not match what was disclosed, or a rate lock that expired while the file sat in underwriting. Any of those is a legitimate, explainable reason, and a good lender will point to the specific line item and show you the before and after.

What is not legitimate is a vague explanation with no underlying cause you can verify. If your lender cannot tie the new terms to one of those actual triggers, ask for it in writing and compare it against your original Loan Estimate side by side. From there it is simple math: the appraisal is portable if it was ordered through a reputable AMC, so the real cost of restarting is usually just time, not the fee itself, and a few weeks of delay is almost always cheaper than a loan that is priced wrong for the life of the deal. I work in mortgage lending, and this exact fight over which changed circumstance is real versus manufactured is one of the more common disputes I see between borrowers and originators.

Nick Belsky · Answer

@Ali Kalaei

As a broker, I always have a backup lender at the ready should the one the client chose to go with goes sideways... the reason is not really relevant and lenders, in general, are super constricted in today's market.  Things are changing all the time and we can be given a variety of excuses as to why they are changing terms or they can't find a note buyer or simply don't like the deal anymore... whatever.  You can't control this so having a back up ready is how we are able to pivot to another lender quickly.  While we rarely have to change lenders, it has been happening far more in the past 6 months than I can remember ever having to prior.

Any lender should allow you to transfer your appraisal out so long as it was ordered properly, usually through an AMC.  If it is a BPO type of appraisal, then you won't likely be able to transfer those.  Although, I have seen a few lenders who are refusing to either transfer or accept transferred appraisals.  So you have to watch out for that as well.  We black list lenders who refuse to transfer out.  It's simply poor professionalism.

Cheers!

Gregory Acs · Answer

I’d draw the line when the long-term cost of staying outweighs the cost of starting over. Losing an appraisal fee is frustrating, but it can be relatively small compared to accepting a loan with materially worse terms over several years.

If the lender is simply asking for normal documentation, that’s one thing. But if the loan structure, pricing, or underwriting changes in a way you weren’t expecting, I’d compare the revised offer against other options before moving forward. At that point, I’d rather make the decision based on the total cost of the loan than the time or money I’ve already invested.

Mike Grudzien · Answer

...well, unless everything changes in my favor!

Mike Grudzien · Answer

I just don't do business if the initial agreement and the initial understanding changes.  Period.

Stacy Raskin · Answer

I think it depends on why terms are changing. Is it because new information was found out about the property during the appraisal such as someone thought the property is in a suburban area but the appraiser marked it rural? In this example, DSCR LTVs can sometimes be different if the property is marked as being in a rural area by an appraiser. It will depend on the DSCR program's guidelines. Unless there's a reason for the terms to change, they shouldn't be changing just because they can.

Andrew Glisson · Answer

If you have a decent relationship with the lender, they will generally assign appraisals over to new lender (if new lender will accept them).

What surfaced during underwriting?

How Far Into a Loan Would You Get Before Switching Lenders?

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