Can I lock in interest rates with more than one lender?

I am purchasing a house and am shopping lenders. I was told that I cannot get a good faith estimate until I lock in the interest rate. Can I lock in with more than one lender to compare their GFE's? And if so, is it still okay if one is a broker and one is a direct lender? Thank you!

1 Answer

Don't understand the "no GFE until rate is locked". A lender cannot supply Good Faith Estimates until a formal loan application has been submitted, but that does not necessarily involve locking the rate. Lenders and borrowers float rates on loans every day; it's a personal choice depending on your risk tolerance and individual circumstances. What lenders want to avoid is triggering applications for loans that don't close, as that costs time, resources, and hedging costs. Loan officers have their pull through rates (# loans closed compared with # loans written) analyzed continually, and if the ratio gets too low, the loan officer may have his pricing adjusted for the worse, hurting all his clients. Most lenders have some sort of loan estimate they can provide borrowers prior to formal application that has the same data (usually in a much clearer form!) so clients can compare loan offers. These are not binding, mind you, and rates can and do change daily or even interday.

Bottom line, if a lender says you have to lock to get his GFE, I would look at other alternatives, or at a minimum, ask if he can provide you with a loan estimate prior to actual loan submission. As far as locking with two lenders, while it is not illegal, it borders on unethical. When a borrower applies with more than one lender, he is forcing someone to work for free (process loan application without closing the loan there), and it's situations like that which have led many lenders to charge lock-in fees, hurting borrowers!

More questions? Give me a call or shoot me an email.