multiple mortgage applications strategy

You do not need to file applications to get rates. You can get a rate quotes over the phone with a minimum of data (loan amount, LTV, credit score, building address, % owner occupied, etc). Call all the major banks and a good mortgage broker for quotes before you commit. Once you pick a horse, you can typically lock it for 30 to 60 days at no cost.

Smartest way to deal with mortgages, assuming no cost to lock:

- Lock with one bank to ensure you can at least get the current market rate
- Float with a second bank to take advantage of any drop in rates over the period between timing and closing. You can float with two banks and have them fight it out, which typically can save you ~25bps

The total cost of this strategy will likely be the extra appraisal fee.

From a lender's perspective, I'm fine with my customer "double app-ing" as long as they come clean with it. Of course, there is no obligation to do so but it would just be the right thing to do. Let the lenders know that they're competing against each other and whoever gets the best rates and closes the fastest gets the deal. The only drawback to making multiple applications are the fees that you would have to pay and having to submit documents multiple times. sunny.hong@bankofamerica.com

Shong, don't mean to be disrepecful, but when did the banks do the right thing with their mortgage clients.

As a mortgage broker I look out for my clients, and yes if you don't mind some extra application fees, why not. That said I don't charge an application fee and right now it may be best to let the rate float on one of your applications. You never know what's going to be with Greece or for that matter, Portugal.

Ellen Silverman
www.esfunding.instantlender.com

REMom, Pawn_Harvester, SHong - Thanks very much for your thoughts

I'm reviving this chain because, in light of the crazy spike in interest rates over that past week, it's particularly relevant as a strategy for anyone who is currently trying to obtain a mortgage (like me, as I'm about to choose a bank) or refinance.

Any further thoughts?

You want to double pay fees ($2000-3000) to save 1/8 of a point? DO that math.

You have to subject the broker to two appraisals not to mention leave one bank at the altar.

the extra fee, i.e. application & appraisal, should be under 1K for most apts.

Former renter, an additional floating loan would give you an option if rates nose dived to 4.0. But you have to be careful with all those hard hits to your credit score. You should do both applications at the same time so you are dinged once or maybe go with a mortgage broker. Also doing both loans at once prevents the under writer from seeing you have a hard hit for another loan application, since this shows up in their credit check. When you do close and if the bank you choose decides to run a final credit check, they will see you had another application and you will have to provide the under writer with an explanation, which I suppose would just be the truth.

A mortgage broker may lock a rate for you and be able to get you another loan quickly with a different bank if rates dropped enough. You have to make them do the work though since they get the same commission no matter what bank they get for you. Also the broker may have higher fees which adds to their profit, but you get someone dedicated to getting you a loan. I advise not to be up front if you double up (sorry shong) because if they know they might rank your application less important. In the end, You will end up telling one bank you won't be using them.
I'm not an expert, this is just my limited experience, so please don't hold me responsible for anything.