Would you ask a lender to match a different lender's rate?

[Andrey Y.]

So in short, I wanted to make an offer on a property sooner than later. I had asked the lender (by phone call and email) I had worked with recently for a refinance. After waiting approx. 1.5 days without a reply, I asked my broker who was going to be putting in the offer if he had any recommendations. I talked with a nice lady at a small community bank, who told me they had a special where they will be offering the same rate whether I wanted to do a conventional loan or portfolio loan. Sweet, I thought.

After I sent in the required docs, the rate for a 20% down loan was 4.5%, whether conventional or portfolio. So we sent the pre-approval letter to my broker to include with the offer. Later on that evening (like 12:30AM), I get a pre-approval letter from my original lender, 4.0% rate for 20% down. Hmm, that's 0.5% difference, huge in my book. So two questions I was hoping you guys can comment on.

1. When push comes to shove, is it okay to ask the lady at community bank if she can match my original lender's interest rate? They probably can't, but who knows. Also, I did mention to her that I hadn't heard back from my lender so I was calling her to expedite the offer.

2. If faced with the option of a portfolio loan at 4.5% vs. conventional loan at 4.0% percent, which would you choose? Assume that you are well below the limit of 4 or 10 for conventional loans.