Shopping Rates and uses preapproval letters to get better offers

[Troy Parker]

Hello BiggerPockets Community!

I am officially under contract for my first home purchase and am scheduled to close 2/17/24! 

I am shopping rates between PNC bank, a credit union, two private lenders, and a potential lender. These are all thirty-year fixed conventional loans for a first-time home buyer using the property as their primary residence. 

Rates: 

- PNC - 6.25%

- Credit Union - 6.8%

- Private lender one (original preapproval) - 7.1% [6.5%*]

- Private lender two (Works with my broker and is very easy to work with) - 6.75%

- Verbal lender (coffee shop connection that works for another broker) - 5.0%

History:

11/1/23 - Got preapproved with lender one two months ago and made an offer and am now under contract as of 1/2/24.

12/30/23 - Reached out to private lender to see if he could do better because I was shopping rates. Private lender two unofficially offered "a little under 6.5%" (6.125% with a point).

12/31/23 - Verbal lender approaches me in coffee shop and says he finds deals for his broker and earns a commission. Verbal lender said he had a meeting with his broker and called me later and quoted me 5.0%. 

1/2/24 - Reached out to private lender two who works with my broker (I'm a realtor). Private lender two offer 6.75%, pointed out a discrepancy on my credit report and offered to send it to me. I told private lender two I had a better offer close to 6.0% with a point. Private lender two told me she could not beat that offer but would review their offer to point out any red flags. 

1/2/24 - Made wire for earnest deposit and got a quote from PNC at 6.25% (6.0% with 0.975 points).

1/2/24 - Reached out to verbal lender to see what info he needed and he responded that he was looking into it. 

1/2/24 - Reached out to all lenders and communicated that I plan to lock in the best rate by the end of the week. 

Considerations:

All of these lenders have acknowledged they can match or beat a rate with another preapproval letter. My current preapproval letter is old. Private lender one's official offer was at 7.1% and I don't have his second offer officially. I don't want anchor the price high with my old preapproval letter. In all my conversations I have avoided showing my preapproval and said I would be going with the best rate and seeing what is most competitive. 

I tried to get private lender two to come down to 6.0% because she is the most proactive and could foster a future lending relationship. I'd be thrilled if private lender one could do 6.0% with no points. I'm hesitant about the potential lender because he seems slow. While I trust my coffee connection, I haven't gotten anything in writing from this alleged 5.0% offer. 

Questions:

How many lenders do you typicially reach out to? How do you leverage other offers, do you give them a copy of your preapproval or tell them you have other offers and ask for the most competitive? What do you think the breaking point is for interest rates in other words, when do you know you've reached the bottom of your rates you qualify for?