The mortgage lending process is complicated, and for many home buyers, it seems like once you land on a mortgage lender, you are stuck. While it can be challenging to switch lenders part way through the home buying process, it is completely possible. No matter the reason you want to switch mortgage lenders, there is no reason that you can’t switch to a different lender.
Common Reasons Buyers Switch Mortgage Lenders
There are hundreds of reasons that home buyers may be interested in finding a new mortgage lender part way through the buying process. Here are some of the most common:
- Lower rates through another lender will save the buyer thousands of dollars throughout the lifetime of the loan. In most of these cases, changing to the lender with a lower rate is a no brainer for the home buyer.
- Delayed paperwork is a common problem with some lending companies. Unfortunately, this is the number one reason that most people switch lenders. The average amount of time that a lender will work on your loan is between 40 and 60 days, which already feels like a long time. When delays push the process out even further, a lot of home buyers get really frustrated. Additionally, in 60 days, a lot can change. For example, rates can increase or decrease dramatically during this time. So, finding a lending company that can help you close on a home quickly is very beneficial.
- Some mortgage lenders just do more for their clients. Maybe you find a new lender who is doing everything in their power to find you lower rates or cut other fees involved in the homebuying process. It is very likely that finding a lender like this will encourage some people to switch to the new lender.
- Fees can be a big burden during this process. Some lenders will require a bunch of excess fees and include a bunch of additional conditions on the loan. For many homebuyers, these things can be a big turnoff. Nobody wants to feel like they are being swindled, especially when they are already getting a large loan.
- Mistrust of a lender can be an issue throughout this process. Are technical issues slowing down the lending process? Has the lending company sent you documents with incorrect or missing information? Have they done anything to lose your trust? Disorganization and incompetence are both major concerns. In these instances, it is very easy for a home buyer to want to switch lenders.
All of these problems signal to home buyers that things aren’t going to work out with the initial mortgage lender. Many home buyers feel an obligation to their mortgage lender, but they really shouldn’t. Instead of worrying about how a lender will feel if you back out, you should focus on the process of switching lenders.
How to Switch Mortgage Lenders Before Closing
The first step to changing mortgage lenders is to find a lender that better suits your needs. Explore other options throughout the home buying process to make sure that you are getting a fair rate and aren’t being asked to pay unreasonable fees.
Once you have gone over all of the rates, terms, payments, fees, and other information, you need to decide what you believe is reasonable. Then, you can start looking for other companies that fit your criteria. You will also need to get copies of your credit reports and FICO scores. These will help new lenders determine your credit and how much they are willing to lend and on what terms.
During the process, you will want to talk to banks, credit unions, and other financial institutions to determine which lenders or institutions can do the best work for you and your specific situation.
Once you have chosen your preferred lender, you will want to provide them with W-2 forms, pay stubs, income tax return documents, copy of the mortgage loan from the previous lender, and a few other documents that will help with the process of obtaining a mortgage application.
Once the application has gone through the underwriting process, you will want to review the loan offer. You will want to ask your lender to review the loan as well.
You should only close on the loan after you have reviewed all of the mortgage terms and are happy with them.
Working with First Fidelis
When you work with First Fidelis, you are in a unique position. We work with more than 15 lenders to help find you the best possible mortgage rates. In addition, we are known for closing on homes very quickly. If you are looking for a home in the Kansas City Metro Area, contact First Fidelis today at 913-205-9978.