RE agent contacted my lender, wants to move mortgage

Buying & Selling Real Estate
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RE agent contacted my lender, wants to move mortgage

Jay Garrison
Chicago, IL · Member since 2018 · 90 posts · 37 votes

Hi,

I have done the appraisal, was waiting on seller to make repairs when my agent - without telling me she was doing this - contacted my lender and discussed moving my mortgage to another lender. 

The new lender offers $7k down pymt assistance (previous lender offered none) but the interest rate is 5.375, as oposed to 4.375 with my current lender. Obviously over a 30 year mortgage the difference completely dwarfs the downpymt assistance. 

In addition, my lender mentioned to my agent that i am gdtting a personal gift to help with the down payment, which doesnt seem kosher to me.

This seems odd to me. My RE agent is saying she is helping me out by "switching" me to this new lender, but iam not so sure. First timer here, am i missing sth or is my math off?

Thanks

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Russell BrazilBusiness Member
Moderator
Real Estate Agent · Washington, D.C. · Member since 2012 · 17k+ posts · 30k+ votes
7y

An agent has no power to move your loan, so I think there is likely a miscommunication going on.

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  • Russell BrazilBusiness Member
    Moderator
    Real Estate Agent · Washington, D.C. · Member since 2012 · 17k+ posts · 30k+ votes
    7y

    An agent has no power to move your loan, so I think there is likely a miscommunication going on.

    [email protected]301-893-4635Podcast Guest on Show #192
    District Invest Group546 Reviews
    WebsiteView Page
    2Reply
  • Jay Garrison
    OP
    Chicago, IL · Member since 2018 · 90 posts · 37 votes
    7y

    sorry, updated to say "discussed" not "initiated". Misleading choice of wording i now see. Banged out that post in a Starbucks on my phone, just very curious if what my agent did is typical and kosher. 

    0Reply
  • Michinori Kaneko
    Rental Property Investor · NY · Member since 2018 · 571 posts · 332 votes
    7y

    that sounds really fishy... but it boils down to the number... what you are ultimately interested in is your ROI. You put in $7k less, and monthly inflow will decrease slightly. when you look at ROI does that increase or decrease your over all ROI? sometimes higher interest rate with lower down payment (depending on size of your loan) yields better return % wise.

    0Reply
  • Cassi Justiz
    Rental Property Investor · Edmond, OK · Member since 2017 · 1k+ posts · 1k+ votes
    7y

    You should be able to use any lender that you like. Your agent can suggest switching, but ultimately it's your loan and your decision. A lot of people have trouble saving up a down payment and are willing to pay slightly higher monthly payments to get into a home. Maybe she thought that was your scenario?

    If you are comfortable with your rate and terms of the first lender, then I would stop the switch. I personally would rather have a lower interest rate than down payment assistance. 

    I would also have a frank conversation with her about what you want to do. If you don't want to switch lenders, you need to tell her and ask her to respect your decision. 

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  • Richard Borashan
    Rental Property Investor · New York, NY · Member since 2018 · 15 posts · 15 votes
    7y

    Sounds like it could be miscommunication but I'd have a hard time with my agent, or anybody, attempting to speak on my behalf without me knowing. Maybe it's possible that your agent was just inquiring on their own out of curiosity and ended up with what they thought was a favorable scenario so then they mentioned it to you?

    Either way I'd speak to them maybe and just see what the logic behind it was. I suppose it's possible that they're getting a referral bonus too by moving you over but that seems suspicious. It's worth bringing up and clearing up any miscommunication.

    1Reply
  • Michael Glist
    Lender · Denver, CO · Member since 2017 · 348 posts · 143 votes
    7y

    In my opinion I would say do the deal with the down payment assistance and then 6-12 later (unless they have a 1-3 year minimum) refinance out of that loan into the other one at the lower rate. When you run the numbers including a new set of closing costs you should come out ahead. 

    Again this is just my opinion based on how I have done things for clients in the past. 

    0Reply
  • Frank Wong
    Real Estate Broker · Bay Area · Member since 2018 · 1k+ posts · 3k+ votes
    7y
    Originally posted by @Jay Garrison:

    Hi,

    I have done the appraisal, was waiting on seller to make repairs when my agent - without telling me she was doing this - contacted my lender and discussed moving my mortgage to another lender. 

    The new lender offers $7k down pymt assistance (previous lender offered none) but the interest rate is 5.375, as oposed to 4.375 with my current lender. Obviously over a 30 year mortgage the difference completely dwarfs the downpymt assistance. 

    In addition, my lender mentioned to my agent that i am gdtting a personal gift to help with the down payment, which doesnt seem kosher to me.

    This seems odd to me. My RE agent is saying she is helping me out by "switching" me to this new lender, but iam not so sure. First timer here, am i missing sth or is my math off?

    Thanks

     Jay, there is no Free Lunch in real estate.  The reason why the new lender is offering you $7k is that the rate is higher.  The yield spread premium between your current rate of 4.375 and 5.375 is $7k.  If you want credit from your lender maybe ask your current lender and see if they will give you credit for a higher rate.

    If you completed the appraisal.  This is no time to switch lenders and mess around your agent should know this.

    1Reply
  • Michael T.
    Los Angeles, CA · Member since 2018 · 326 posts · 279 votes
    7y

    @Jay Garrison this story doesn't sound correct, whether it's a miscommunication between you and your agent or you and your lender.

    As @Frank Wong mentioned now is not the time to be changing lenders as you're probably far enough in that you may miss necessary deadlines.

    My recommendation is similar to @Richard Borashan to get your agent and lender on the phone at the same time and make sure you are all on the same page. 

    1Reply
  • Lynn McGeein
    Real Estate Agent · Virginia Beach, VA · Member since 2012 · 2k+ posts · 1k+ votes
    7y

    Our standard contracts will not allow a change in lender without written permission from the seller, so I'm not sure why your agent is trying to introduce this, especially if it's after the appraisal.  Was there an issue where your loan is not moving forward and she needs to help you salvage the purchase?  Otherwise, if it were me, I would definitely have a problem with my agent interfering with my loan without my prior approval.  

    0Reply
  • Randy Janoe
    Lender · Asheville, NC · Member since 2019 · 60 posts · 50 votes
    7y
    Originally posted by @Jay Garrison:

    Hi,

    I have done the appraisal, was waiting on seller to make repairs when my agent - without telling me she was doing this - contacted my lender and discussed moving my mortgage to another lender. 

    The new lender offers $7k down pymt assistance (previous lender offered none) but the interest rate is 5.375, as oposed to 4.375 with my current lender. Obviously over a 30 year mortgage the difference completely dwarfs the downpymt assistance. 

    In addition, my lender mentioned to my agent that i am gdtting a personal gift to help with the down payment, which doesnt seem kosher to me.

    This seems odd to me. My RE agent is saying she is helping me out by "switching" me to this new lender, but iam not so sure. First timer here, am i missing sth or is my math off?

    Thanks

     How much are you financing?

    How long are you planning to hold the mortgage before you sell or refinance. 

    Short term yield impairment can be hyper critical. For example, if you plan to hold the property a year, the 7k credit (discount) would substantially out weight any interest accrual over the same duration. Conversely, if you plan to hold the property until it is paid for, the rate will be more advantageous.

    I can calculate the break even point for you (from a yield perspective) if I know how much you are financing and how long you plan to hold the note.

    -Randy

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