0
Couple of points to consider here. First is that your first lender, who is paying all your closing costs, will be out thousands of dollars should you refi that loan immediately. Sure he would NEVER have agreed to cover your costs if you told him you had any intention of closing the loan and then paying it off. Your proposed strategy might be legal, but I would certainly not call it ethical.
Secondly, why would you even close first loan if you’re not happy with the appraisal and with the rate? Seems to me there is no reason to do so. Have you asked your first lender about rate renegotiation? Lenders can sometimes work with borrowers when rates move dramatically during the loan process.
Basically, you and your lender should have a partnership. He is providing a service to you as much as a product, and is a professional whose time and expertise are every bit as valuable as your money. When you put a lender through the loan process without being committed to the loan, you’re wasting his resources without compensating him. The time to shop, under most circumstances, is before you commit to the loan, not after.
Lastly, rates haven’t moved nearly as much as you state. PRICING may have changed by 50-75 bps, but not rates. Best execution rates have been in the 3.75% + or – .125% range for some time. If your current rate lock is far above that, right thing to do would be to ask first lender if they can renegotiate to lower rate. If answer is no, and 2nd loan is that much superior, cancel the first loan and close the second.
Rates are swinging 50-75 bps in matter of week. Appraisals are also getting uncertain (and dropping from lender to lender).
I’m close to closing a refi with 1st lender with much lower appraisal than my purchase, I should add – but I’m ok with paying the difference down. I was also able to rate lock a lower rate with 2nd lender when rates dropped further, but to do an appraisal with them and get results will be atleast 2 weeks away and in mean time, I’ll lose rate lock on the first lender. To add, I’m getting a no closing cost refi with both lenders (no lender fees or 3rd party fees). So there’s no cost aspect to me other than the appraisal fee I pay upfront
Can I close with 1st lender and then, if the appraisal is within reason with the 2nd lender, close with him again in matter of weeks? and if appraisal is worse than anticipated, drop the refi process with 2nd?
I appreciate your advise.
Thanks, Rakesh
1