Mortgage Brokers & Lenders
Market News & Data
General Info
Real Estate Strategies
Landlording & Rental Properties
Real Estate Professionals
Financial, Tax, & Legal
Real Estate Classifieds
Reviews & Feedback
Updated 8 days ago, 12/18/2024
Shopping around for better rates
I am in the process of buying a property. I have used a lender in the past and wanted to shop around to see who can give me the best rates. I got pre-approved by my previous lender and by another lender. My previous lender was not happy that I was shopping around. The new lender gave me a better interest rate and lower monthly payment by a few dollars. I want to keep a good relationship with my previous lender but if I do not go with him, the relationship is broken. What should I do?
Hi Kevin,
Is the minor payment difference worth the relationship? If you know this lender can close and provide an excellent service? Why would you jump ship to save a few dollars?
I think it only makes sense to switch if your current lender is not meeting your expectations, and the rate/fees are significantly different. You also need to make sure this lender is able to perform on their promise.
I think the best thing to do is to go back to your previous lender, and provide an LE from your new lender and ask if there is possibility to get close to the term sheet. I would also recommend doing your due diligence on the new lender, and make sure they are not just a salesy loan officer trying to win you over with term sheets that don't exist...
Mortgage lending is highly competitive, and there are many newbie loan officers that will bend over backwards to get you to pull a credit report and pay for an appraisal. Be mindful of this, and make sure you ask all the proper questions before you jump ship.
- Erik Estrada
- [email protected]
- 818-269-7983
Thank you for you feedback Erik.
Both lenders are highly recommended by my realtor. Over the 30 year period, I would about $10,000 dollars with the other lender if I do not buy down the rate. With a rate buy down, the difference in payment is more significant.
I plan to talk to both of them in the morning to figure out which is the best option for me.
Hey Kevin,
As a homebuyer, it is in your absolute best interest to shop around lenders for the best rates and terms. Is your previous lender a family member or a close friend? I find it weird that your previous lender gave you trouble. Business is business!
Quote from @JooYung Choi:
Hey Kevin,
As a homebuyer, it is in your absolute best interest to shop around lenders for the best rates and terms. Is your previous lender a family member or a close friend? I find it weird that your previous lender gave you trouble. Business is business!
He is not a family member or a close friend. He was a referral from an investor. I think he was upset because I used him in the past and he may have expected that I would continue with his services. I know in business that every dollar counts but is it worth it to burn a relationship?
If you were satisfied with your previous lender's services and the difference in rates / points is negligible then I would say use him again. Since you are an investor, it is important to build relationships with lenders who know what they're doing.
However, If you end up not choosing him as your lender, just know that you are not the one burning the relationship. This isn't the last home you will be buying in your lifetime.
He should not get upset that you are doing your due diligence. You need to know if you are getting a good deal or not! Personally, he would lose my business if he disapproved of me shopping around.
Quote from @Kevin Oh:
Quote from @JooYung Choi:
Hey Kevin,
As a homebuyer, it is in your absolute best interest to shop around lenders for the best rates and terms. Is your previous lender a family member or a close friend? I find it weird that your previous lender gave you trouble. Business is business!
He is not a family member or a close friend. He was a referral from an investor. I think he was upset because I used him in the past and he may have expected that I would continue with his services. I know in business that every dollar counts but is it worth it to burn a relationship?
Hi Kevin,
We're happy to compete for your business. A lender should not be guilting you into staying with them. I have a lot of clients where I only get their DSCR business, but not their fix and flip. Different lenders can serve different purposes. Happy to chat if you're want to see what else is out there.
Quote from @JooYung Choi:
If you were satisfied with your previous lender's services and the difference in rates / points is negligible then I would say use him again. Since you are an investor, it is important to build relationships with lenders who know what they're doing.
However, If you end up not choosing him as your lender, just know that you are not the one burning the relationship. This isn't the last home you will be buying in your lifetime.
He should not get upset that you are doing your due diligence. You need to know if you are getting a good deal or not! Personally, he would lose my business if he disapproved of me shopping around.
Especially the first part. I second this
#3 Contractors Contributor
- Realtor
- Boulder, CO
I’ve had several investor clients go with a new (to me)/ unproven lender because of a slightly lower rate promise only to get burned by that lender (closing costs were higher, appraisal costs much higher and appraisal was a nightmare, main point of contact gave us the clear to close as we passed our financing contingency then just before closing someone from the underwriting department we previously didn’t know existed said we need a few more days and seller didn’t agree because they had a higher backup offer, jeopardizing the earnest money and losing the property, etc). There is a lot more to it than the rate. Look at all the differences in both rate and terms but most important in my opinion is their track record in customer service and meeting deadlines and closing. The worst lenders I have dealt with are the ones with underwriters in one time zone and origination department in another, branch manager in another that don’t communicate well with each other and end up over-promising while not being able to deliver. If you have a good relationship with a lender who has a track record of great customer service and hitting all deadlines, even better if they have a good local reputation with the listing agents in the market that you do business in, then that’s worth more than the promise of a slightly lower rate from an untested lender IMO.
Hello,
It does hurt when this happens. I hurts a lot in my chest when I am shopped or left because I could not provide the best option. BUT (It hurts to write this)
It’s great that you’re taking the initiative to shop around for the best rates—this is a smart move when making such a significant investment. Remember, buying a property is a financial decision that should align with your long-term goals and comfort.
If the new lender offers a better rate and lower monthly payment, it’s reasonable to consider that option. However, maintaining a good relationship with your previous lender is also valuable. Transparency can go a long way. You might approach your previous lender and explain the situation honestly but tactfully. For example:
"I deeply value the relationship we’ve built and appreciate the excellent service you’ve provided in the past. I’ve been exploring my options to ensure I make the most informed financial decision for my family. I hope you understand this is purely about what works best for my budget. I’d love to continue our connection and work with you in the future if the opportunity arises."
This approach conveys your respect and appreciation while making it clear that your decision isn’t personal—it’s practical. A professional lender should understand this. Ultimately, you should choose the option that best supports your financial well-being while striving to keep the relationship amicable. Good luck with your property purchase!
Two sides of course, as a home buyer you need to do what's best for you and if anyone (us included) can't give you that then we would be the first to tell you. Keep that in mind.
The second side, is a few dollars lower in payment really the absolute best thing for you? I don't actually have an answer and it's not rhetorical. How valuable is the first lender as a resource and network connection for you? How trustworthy are they and are you confident in their ability to help? Reputation matters for your offers in the future and can be the difference between getting a deal and losing it, will either of these lenders help more with that over the other?
Typically my analogy is something like: if you're in a happy relationship, you're not going to go looking and see if the grass is greener on the other side... so for you what is it you're really looking for?
- Derek Brickley
- [email protected]
- 734-645-7722
Hey @Kevin Oh,
It’s great that you’re shopping around for the best deal! A good lender should understand that. You could try explaining to your previous lender that while you value the relationship, the numbers make more sense with the new lender this time.
Let them know you’d still love to work together on future deals if the terms align better. A strong professional relationship should be able to handle honest communication!
Hope this helps!
Quote from @Trevor Finn:
Hey @Kevin Oh,
It’s great that you’re shopping around for the best deal! A good lender should understand that. You could try explaining to your previous lender that while you value the relationship, the numbers make more sense with the new lender this time.
Let them know you’d still love to work together on future deals if the terms align better. A strong professional relationship should be able to handle honest communication!
Hope this helps!
