In an ideal world, you choose the lender whom you want to work with before you begin your home-buying process. However, it’s fairly common for borrowers to want to make a change during the escrow process where it might make financial sense to switch lenders during the purchase process. For more information about how to choose a lender, you can check out our blog on the topic by clicking here.
Switching lenders during the loan process is not as difficult as you might originally think. The biggest hurdle to overcome is often the fact that there is less time to secure your loan than originally anticipated. This hurdle can easily be overcome by a competent mortgage lender as long as you can provide them with all of the information and documentation requested in a timely manner. Independent mortgage banks, such as Bluefire Mortgage Group, are nimble and able to close faster than larger bureaucratic institutions.
Once you have chosen a new mortgage lender to work with, one of the best things you can do is to introduce the new lender to your real estate agent and let everyone in the transaction know that you are switching lenders. If you are already under contract and changing lenders does not allow the seller to back out of the transaction. By letting all parties know you ensure that proper communication is taking place as escrow and title will need to communicate with the new lender.
Depending on how far along in the process you are, you will need to take certain actions. You will need to e-sign new initial loan disclosures with the new lender. Depending on the loan program you might need to order a new appraisal. Remember that not all lenders are the same and some will have more strict guidelines than others when it comes to their process.
Ultimately, the key takeaway is that switching lenders during the escrow period is not a major issue if done correctly. The most important thing is to ensure that you pick a good lender on the second go around and ideally one who has experience with stepping in midway through the transaction. A borrower should not feel that they are being taken advantage of or forced to work with a lender that may not have their best interests in mind.
If you have any further questions give us a call at (760) 930-0569 and we will be happy to answer any questions about the mortgage loan process.