Backup Lenders - Acceptable or considered distasteful?

[Alexander V.]

I recently had a nasty lender experience. I had been pre-approved for a loan, everything was golden, I'm a low risk loan and had low DTI. Nothing changed since being approved and going through the entire loan process, yet 1 day before closing the lender called me claiming that they ran the numbers through their underwriting system again and it suddenly said I was no longer qualified for the loan. They claimed that they couldn't tell me what changed or why I was no longer approved, but--guess what comes next!--accepting a higher interest rate should fix it. This was the second curve ball that they'd thrown me, one in the middle of the transaction and this one is at the very end of the process. If I had any other option, I would have told them they'd lost my business, but I had no other options (and they probably assumed as much).

So for future reference, is it legal/fair to get pre-approved by 2-3 different lenders and go through the loan process with each lender so that if your primary lender does something shady or incompetent at the last minute you've got other options on standby and can quickly switch? Switching at the last minute without having a backup that has already been working through the process in parallel could take weeks and the deal could fall through, but having two or three lenders who are all planning on giving you the loan and have been going through the entire process would make it a non-issue.

The way this experience worked out, I had to take the higher interest rate just to avoid losing the deal. This amounted to me having to pay an additional $100 per month in P&I for the entire duration that I hold this property just because the lender "accidentally" realized this was the "only way" at the very last minute when I was in a corner and no longer had time to seek other lenders. The deal was still good, but this scheme was no minor error--it cut my cashflow by about 25%. I'd like to protect myself against this sort of nonsense on future purchases.