At what point am I locked into a mortgage agreement?
December 12, 2021 12:55 PM Subscribe
I'm shopping for a refi. I have an offer from Citizens Bank. But...
the mortgage salesperson used to be a mortgage broker for a brokerage company and she did our initial purchase two years ago and our last two refi's in a 25-year span. For all those, she did comparison shopping and got us the best deal (I hope). Now she's an employee of Citizens Bank and obviously only offerng me THEIR deal.
I have another offer as well, from Allied Bank. It's a half-point lower. I got this from a list that Lending Tree spat out for me.
The person at Citizens Bank told me that other banks might offer me a better rate but they will sink more fees in, perhaps bait and switch at point of signing, etc., and we should trust her. and, the thing is, I DO trust her.
On the other hand, she works for Citizens Bank, so is only giving me THEIR offer. So here is my question:
At what point in this process do I lock in not just my rate, but my LEGAL OBLIGATION to go through with the closing of this mortgage? So that, if I go with Allied's lower rate, but then, when I'm actually presented with paperwork, and the offer has changed, and not in my favor, when is it a matter of "tough nougies on me" (a regional term, perhaps, for "tough shit") and I must go through with the deal?
another issue is that mortgage rates are going up so I want to wrap this up, whether it's with Citizens or Allied, ASAP. Thanks!
Yes, you are not my lawyer, but maybe you have some experience or knowledge about this? and also, I don't know that I want to consult a lawyer just to ask this question. Or is that something people do? And I also don't know a real estate attorney -- ours retired. So I'd be flailing in lawyer-darkness. I am in NYC, by the way,
(oh and yes I asked another mortgage question last year but I don't think it's relevant to this later-in-the-process discussion)
the mortgage salesperson used to be a mortgage broker for a brokerage company and she did our initial purchase two years ago and our last two refi's in a 25-year span. For all those, she did comparison shopping and got us the best deal (I hope). Now she's an employee of Citizens Bank and obviously only offerng me THEIR deal.
I have another offer as well, from Allied Bank. It's a half-point lower. I got this from a list that Lending Tree spat out for me.
The person at Citizens Bank told me that other banks might offer me a better rate but they will sink more fees in, perhaps bait and switch at point of signing, etc., and we should trust her. and, the thing is, I DO trust her.
On the other hand, she works for Citizens Bank, so is only giving me THEIR offer. So here is my question:
At what point in this process do I lock in not just my rate, but my LEGAL OBLIGATION to go through with the closing of this mortgage? So that, if I go with Allied's lower rate, but then, when I'm actually presented with paperwork, and the offer has changed, and not in my favor, when is it a matter of "tough nougies on me" (a regional term, perhaps, for "tough shit") and I must go through with the deal?
another issue is that mortgage rates are going up so I want to wrap this up, whether it's with Citizens or Allied, ASAP. Thanks!
Yes, you are not my lawyer, but maybe you have some experience or knowledge about this? and also, I don't know that I want to consult a lawyer just to ask this question. Or is that something people do? And I also don't know a real estate attorney -- ours retired. So I'd be flailing in lawyer-darkness. I am in NYC, by the way,
(oh and yes I asked another mortgage question last year but I don't think it's relevant to this later-in-the-process discussion)
Best answer: Founder of a mortgage lender here. At no point during your home buying process are you obligated to your current lender. There are reasons why you may not want to (already paid for an appraisal with one lender or you are close to a closing and another lender would not be able to be ready in time). It sounds like you're still early, so you can shop around all you like.
Loan officers will have you believe that you are locked in with them and try to scare you from shopping around. Don't fall for it! Even if you lock a rate or sign a Notice of Intent to Proceed, there is nothing they can legally to do prevent you from going with another lender.
Regarding your LO's comments about fees, ask for an official Loan Estimate from each lender you speak with. That will allow you to do an apples to apples comparison and is legally binding. It should look exactly like this. Don't settle for anything that looks different. They must be that exact form to be legally binding.
Also, we have no idea what rates are going to do. Nobody can predict that. Folks have been saying rates can't possibly stay at current levels for 20 years, yet here we are.
posted by AaRdVarK at 1:51 PM on December 12, 2021 [31 favorites]
Loan officers will have you believe that you are locked in with them and try to scare you from shopping around. Don't fall for it! Even if you lock a rate or sign a Notice of Intent to Proceed, there is nothing they can legally to do prevent you from going with another lender.
Regarding your LO's comments about fees, ask for an official Loan Estimate from each lender you speak with. That will allow you to do an apples to apples comparison and is legally binding. It should look exactly like this. Don't settle for anything that looks different. They must be that exact form to be legally binding.
Also, we have no idea what rates are going to do. Nobody can predict that. Folks have been saying rates can't possibly stay at current levels for 20 years, yet here we are.
posted by AaRdVarK at 1:51 PM on December 12, 2021 [31 favorites]
Response by poster: AaRdVarK, this is EXACTLY the kind of help I was hoping to get. Thank you so much!!!!
posted by DMelanogaster at 2:30 PM on December 12, 2021
posted by DMelanogaster at 2:30 PM on December 12, 2021
Best answer: Concur with everything AaRdVaRk said. Get that official Loan Estimate doc and compare lenders point by point.
If the final docs don't match match the Loan Estimate, don't sign!! (There may be pro-rata items that are slightly different if you close at a different point in the month than the Loan Estimate assumed. Your loan officer should be able to clearly walk through it.)
Anecdotally, we threatened to walk away from a refi 2 days before closing as the market moved and we were seeing way better rates elsewhere. The lending desk matched the outside rate - they didn't want to see us to walk after the mortgage officer had put in all the legwork. You haven't committed to anything until you sign the actual docs at the closing.
posted by foodmapper at 2:46 PM on December 12, 2021 [2 favorites]
If the final docs don't match match the Loan Estimate, don't sign!! (There may be pro-rata items that are slightly different if you close at a different point in the month than the Loan Estimate assumed. Your loan officer should be able to clearly walk through it.)
Anecdotally, we threatened to walk away from a refi 2 days before closing as the market moved and we were seeing way better rates elsewhere. The lending desk matched the outside rate - they didn't want to see us to walk after the mortgage officer had put in all the legwork. You haven't committed to anything until you sign the actual docs at the closing.
posted by foodmapper at 2:46 PM on December 12, 2021 [2 favorites]
Response by poster: This is great advice. Now my Citizens Lady is asking me if the (lower interest) Allied Guy does CEMAs. I looked it up (ha). I guess the point is that she DOES, and if he does not, her closing costs will be lower. She also asked if the Allied Guy does assignments, but I thought pretty much every bank does assignments after you get the mortgage from them (well my current mortgage is at Chase and they didn't, but...)
So much to learn!
posted by DMelanogaster at 4:11 PM on December 12, 2021
So much to learn!
posted by DMelanogaster at 4:11 PM on December 12, 2021
Response by poster: now I just found out that CEMA loans take around 90 days, and rate locks last only 45 days, so if you do a CEMA the rate could change before closing. Grrrr. thanks for help, everyone!!
posted by DMelanogaster at 5:06 PM on December 12, 2021
posted by DMelanogaster at 5:06 PM on December 12, 2021
I refied my house in 2020, and the mortgage broker guy I trusted for years couldn’t come close to the quote I got from an internet mortgage bank. My old guy told me all kinds of stories about fees (you can compare all fees, the paperwork is the same), banks not showing up with a check, and then he just said I was outright lying at the rate I got.
We closed with the internet bank on time, with no mysterious hidden fees, at a rate that was far better than the mortgage broker’s.
I have also entertained offers from retail banks, and not once has a retail bank come even close to what the internet mortgage banks do.
posted by Geckwoistmeinauto at 5:13 PM on December 12, 2021 [3 favorites]
We closed with the internet bank on time, with no mysterious hidden fees, at a rate that was far better than the mortgage broker’s.
I have also entertained offers from retail banks, and not once has a retail bank come even close to what the internet mortgage banks do.
posted by Geckwoistmeinauto at 5:13 PM on December 12, 2021 [3 favorites]
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posted by DMelanogaster at 12:56 PM on December 12, 2021