When am i bound to go through with a refinance?

[Shari B.]

I am shopping around for a cash out refi on a rental property and have a couple of very good prospects. Conventional loan, excellent credit and reserves, nothing owed on the property and the property is seasoned. One of the mortgage companies has approved me, subject of course to an appraisal. They want me to sign something that lets them start the title search. Is that customary? I mean, I'm not sure if I want to go with this lender yet, as I'm still waiting for the conditional approval from another lender who might come with better terms. If I let the first lender start the title search am I bound to go through with the mortgage with this lender? The broker that I am talking to says that this is standard.

Let's say it is standard and it doesn't bind me to go forward. Should I feel bad if the lender spends the money on the title search and I don't use them? Thanks!

[Mike Grudzien]

Shari,
Good job thinking ahead and thinking this through.  I'm going to follow to see the answers, too!  Wish you well in your search and your project.
Mike

[Shari B.]

Quote from @Mike Grudzien:

Shari,
Good job thinking ahead and thinking this through.  I'm going to follow to see the answers, too!  Wish you well in your search and your project.
Mike

 Thanks! It seems like such a little thing. I've done refis before, even one on a different rental property. However, you know what I've never done until this ref? SHOP! So it was never an issue before; I just went forward once I got an approval.  

[Shari B.]

Quote from @Account Closed:

Quote from @Shari B.:

I am shopping around for a cash out refi on a rental property and have a couple of very good prospects. Conventional loan, excellent credit and reserves, nothing owed on the property and the property is seasoned. One of the mortgage companies has approved me, subject of course to an appraisal. They want me to sign something that lets them start the title search. Is that customary? I mean, I'm not sure if I want to go with this lender yet, as I'm still waiting for the conditional approval from another lender who might come with better terms. If I let the first lender start the title search am I bound to go through with the mortgage with this lender? The broker that I am talking to says that this is standard.

Let's say it is standard and it doesn't bind me to go forward. Should I feel bad if the lender spends the money on the title search and I don't use them? Thanks!

We have favorite title & escrow companies in each of the communities we buy in. So, we incur little if any cost on prelims. It is slightly different. However, you may be charged for a title search, but it does not bind you to doing business with them or that lender.

When you buy bread, if you don't like what is being offered at one store, you can put the loaf back on the shelf and go to another store.  It's the same with loans.

On a $400,000 loan for 30 years, a 1/4% interest difference costs you something like $23,000 in frozen costs not to mention that you could be investing that money along the way.
Here are some of the companies owner by Fidelity National

All of the major title companies get their titles through 

FIDELITY NATIONAL TITLE INSURANCE COMPANY

and their list is something akin to 

And on it goes. 

 This is very helpful and enlightening. You make a good point about the cost of interest! I feel a bit better. Thanks

[Bill B.]

If the company you are waiting on is slow/non-responsive when trying to win your business I wouldn’t expect quality service if you choose to go with them. You should never have to wait more than 24 hours for a quote. 

You are just as likely to have the rates climb while you wait on this subpar company as you are to get a better deal. Or have them come back to you with a “things have changed” adjustment to the rate/costs after you choose them.  I assume both companies are brokers with 10+ lenders competing for the deal.  Good luck. 

[Kristine Ann]

I completely agree with @Bill B..  The broker that is moving forward and getting things done is where I'd stay.  They will come up with similar options anyway.  (The only exception would be dealing directly with a credit union who may have slightly lower rates.)

[Elias Halvorson]

You're not bound at all, anytime. During the refi boom I had people cancel on their lender and switch with me after they had signed closing documents(this was during the 3 day right of rescission for the VA loan) you may incur costs such as the appraisal, but other than that you shouldn't owe anything to the lender. You can still keep the title company and switch to another lender. Normally I would agree with the above comments with regards to responsiveness, but on refinances time is not as critical and I would recommend going with the best rate. ALWAYS. I'd recommend going with a broker as they usually have better interest rates, and paying attention to rates (mortgagenewdaily.com) to see if they've fallen since you locked your rate and you could potentially float down to a better interest rate

[Erik Estrada]

If your goal is to minimize fees and have the lowest rate, I would normally advise the client to start with their current bank if they have a clean file. Many times the bank where you have plenty of funds in your checking and savings may offer a very good rate and minimal fees. 

If however you don't have good credit, the scenario is unique, or you are getting denied by several lenders, I would recommend working with a broker. Fees may be higher but you will save a lot of time and cost. Many borrowers will try to shop it themselves and end up having a bad experience, getting the loan denied after months of work, and/or end up paying a lot more for their loan. 

[Jacob Sherman]

I can assist with a DSCR loan . Have you looked into those yet ?

[Raymond J. Rodrigues]

@Shari B., a title search is conducted by your title company, not your lender. You can keep the same title company and switch different lenders. So to answer your question, you are not bound to a lender. You do not need to wait for a conditional loan approval to know whether which lender is offering you better terms. Just ask them both to lock in your rate and send you a rate lock loan estimate and move on. Don't let them do all this extra work to determine which ones a better fit for you. Unless you feel like you may qualify through underwriting with one bank and not the other. 

[Ron S.]

Quote from @Account Closed:

Quote from @Shari B.:

I am shopping around for a cash out refi on a rental property and have a couple of very good prospects. Conventional loan, excellent credit and reserves, nothing owed on the property and the property is seasoned. One of the mortgage companies has approved me, subject of course to an appraisal. They want me to sign something that lets them start the title search. Is that customary? I mean, I'm not sure if I want to go with this lender yet, as I'm still waiting for the conditional approval from another lender who might come with better terms. If I let the first lender start the title search am I bound to go through with the mortgage with this lender? The broker that I am talking to says that this is standard.

Let's say it is standard and it doesn't bind me to go forward. Should I feel bad if the lender spends the money on the title search and I don't use them? Thanks!

We have favorite title & escrow companies in each of the communities we buy in. So, we incur little if any cost on prelims. It is slightly different. However, you may be charged for a title search, but it does not bind you to doing business with them or that lender.

When you buy bread, if you don't like what is being offered at one store, you can put the loaf back on the shelf and go to another store.  It's the same with loans.

On a $400,000 loan for 30 years, a 1/4% interest difference costs you something like $23,000 in frozen costs not to mention that you could be investing that money along the way.
Here are some of the companies owner by Fidelity National

All of the major title companies get their titles through 

FIDELITY NATIONAL TITLE INSURANCE COMPANY

and their list is something akin to 

And on it goes. 

this was not useful.

[Ron S.]

you have no duty to move forward unless you sing loan docs and in the case of a refinance, not even then for the first three days after. If they spent money on credit, title, etc., its all a part of doing business. That doesn't mean they won't send you a bill but, they can't make you go through with a loan.

[Stephanie Medellin]

Quote from @Ron S.:

you have no duty to move forward unless you sing loan docs and in the case of a refinance, not even then for the first three days after. If they spent money on credit, title, etc., its all a part of doing business. That doesn't mean they won't send you a bill but, they can't make you go through with a loan.

 The right of rescission only applies to owner-occupied property refinances - not investment properties!

[Ron S.]

Quote from @Stephanie Medellin:

Quote from @Ron S.:

you have no duty to move forward unless you sing loan docs and in the case of a refinance, not even then for the first three days after. If they spent money on credit, title, etc., its all a part of doing business. That doesn't mean they won't send you a bill but, they can't make you go through with a loan.

 The right of rescission only applies to owner-occupied property refinances - not investment properties!

 i missed the "rental property" component of the post. Good catch.

[Ron S.]

Quote from @Account Closed:

Quote from @Ron S.:

Quote from @Account Closed:

Quote from @Shari B.:

I am shopping around for a cash out refi on a rental property and have a couple of very good prospects. Conventional loan, excellent credit and reserves, nothing owed on the property and the property is seasoned. One of the mortgage companies has approved me, subject of course to an appraisal. They want me to sign something that lets them start the title search. Is that customary? I mean, I'm not sure if I want to go with this lender yet, as I'm still waiting for the conditional approval from another lender who might come with better terms. If I let the first lender start the title search am I bound to go through with the mortgage with this lender? The broker that I am talking to says that this is standard.

Let's say it is standard and it doesn't bind me to go forward. Should I feel bad if the lender spends the money on the title search and I don't use them? Thanks!

We have favorite title & escrow companies in each of the communities we buy in. So, we incur little if any cost on prelims. It is slightly different. However, you may be charged for a title search, but it does not bind you to doing business with them or that lender.

When you buy bread, if you don't like what is being offered at one store, you can put the loaf back on the shelf and go to another store.  It's the same with loans.

On a $400,000 loan for 30 years, a 1/4% interest difference costs you something like $23,000 in frozen costs not to mention that you could be investing that money along the way.
Here are some of the companies owner by Fidelity National

All of the major title companies get their titles through 

FIDELITY NATIONAL TITLE INSURANCE COMPANY

and their list is something akin to 

And on it goes. 

this was not useful.

Nor was your comment required.

 No. it was completely required.