Lock with One Lender - Float with Another

I am probably closing in the next month or so. I was thinking of locking a rate with one lender and floating an application with another - sort of to hedge my bets, I will go in the end with the lower rate. Is there a reason I should not do this?

2 Answers

Are we speaking legally, or ethically?

While I understand that you want to get "the best deal", let's remember that you are dealing with real people in real jobs while doing this.  How would you feel if someone asked you to do all the work, which you did, just as you were asked - let's say in this case, the lender that you lock with.  But now, your company has incurred expenses to handle this transaction and you won't be paid - all despite the fact that you did everything agreed upon.

The lender has the responsibility to stick to their end of the bargain, and you have that same responsibility.  Rather than try to play lender against lender, find a good loan originator that monitors the MBS (mortgage backed security) market and can give you quality sound advice about locking and floating.

That's my advice to you.

Actually I could see using this tactic if you were using two different banks, but if you are using a mortgage broker there is really no reason to have to do this.

A mortgage broker can do this for you if you communicate with them. Instead of leaving one of the companies out in the cold after having performed all of the services you requested of them, you can just use one broker that will submit you loan through one lender on a locked rate and float it with another!

Banks won't be able to do this but mortgage brokers can. This is why it's so important to have good communication with your mortgage broker if you are working with one. It's never good to burn bridges and that is exactly what you will be doing if you stiff one of the brokers after they work very hard for you.

So I guess my answer would be yes if it's a bank and no if it's a mortgage banker or mortgage broker. You are the one that has to look in the mirror every morning so the choice is ultimately yours to make.